Publications: Notes at the Margin

Why Export? (January 16, 2017)


For the world’s oil industry, it is critical to understand the border tax quickly. Why? Because its passage will likely change oil flows completely. As explained in this report, most US oil producers would have every incentive to sell at home and none to export. It may even be profitable for US Gulf Coast refiners to hire expensive Jones Act ships to move products to the East Coast. If so, the domestic product market there may be foreclosed to European and Canadian refiners. Irving’s facility in Nova Scotia, for instance, might fall victim to the tax. Bluntly speaking, for oil the law’s passage is pure mercantilism. Exporters from Mexico, Canada, and the rest of the world could be shut out. As Woody Allen would say, “Sorry, suckers.”


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