Having floated a possible export ban on crude oil as a trial balloon last month, the Biden administration earlier this week abandoned the idea, as opposition emerged quickly from Democrats in oil-producing districts.

But the mere fact that this proposal received serious consideration illustrates three eternal truths about Beltway policy-making. The first is the virtual certainty of unanticipated or ignored adverse consequences. The second is an ironclad determination to deny the first as new proposals are advanced from the notional stage to actual legislative language.

And the third: Rising gasoline prices are the bête noire of elected public officials, as they inflict significant, highly visible costs on household budgets. And notwithstanding herculean efforts by those elected officials to blame the (fiercely competitive) fossil-fuel industry, OPEC+, the Covid pandemic, supply-chain issues, previous officeholders, and anyone or anything else, rising gasoline prices are decidedly not salutary for approval ratings, election prospects, influence, or any of the other currencies politically valuable in the modern Beltway.

And so, as night follows day, rising gasoline prices spur political attacks, endless blame-shifting, and proposals to do something to drive prices down, among them the aforementioned idea to ban crude-oil exports, on the grounds that such a policy would increase domestic supplies of crude oil and thus drive down the prices of refined products.

Notwithstanding the administration’s political decision not to pursue this idea, no one seems to have noticed that, ironically, it would have the opposite effect on gasoline prices. In the absence of policy distortions, domestic prices for refined products must equal international prices net of transportation costs, quality differences, and other minor complexities. If domestic prices were lower, foreign suppliers would shift sales to other economies, reducing overall supplies to the U.S. market, until domestic and international net prices were equalized.

The current price difference between domestic (West Texas Intermediate) and foreign (Brent) crudes is about $3-$4 per barrel. A ban on crude exports initially would reduce domestic prices modestly, by about $2 per barrel. This would be a straightforward supply-and-demand effect increasing artificially the difference between the spot price for crudes produced domestically and those overseas.

Put aside the reality that foreign crude producers would reduce their exports to the U.S. market, thus offsetting the downward pressure on U.S. crude prices. Proponents of the export ban assume that the notional reduction in the domestic price of crude oil would yield a decline in the prices of such refined products as gasoline and diesel fuel. Counterintuitively, that is not correct because a ban on crude exports would create an important market distortion: Refined products are not included in the export ban; they are traded freely in the international market.

Accordingly, a ban on crude exports would increase the difference between domestic and international prices of refined products and thus would strengthen the incentive to export them. If this market response were simply allowed to play out, the export ban would not yield the intended decline in gasoline prices. It cannot shock anyone to discover that one distortion created by government would lead to another: There would emerge a political demand for limits or a ban on exports of refined products as well.

An attempt to limit exports of refined products would be an administrative nightmare: Because domestic gasoline prices would be lower than foreign ones, incentives to export refined products would strengthen. But the limits on such exports would mean that the government would have to allocate somehow the rights to export refined products. Which refiners would receive such favoritism, and in what quantities? Which foreign buyers of U.S. gasoline would be allowed to do so? How would existing contractual arrangements be addressed? The list of administrative questions to be resolved would be very long indeed.

The political pressures from industries, regions, interest groups, and congressional power centers would be intense, and one set of decisions would yield massive distortions leading to new policies and regulations creating even greater ones. That is why no one for now is proposing that exports of gasoline and other products be limited, which means that the domestic and international prices of gasoline must be equalized by market competition. Accordingly, a ban on exports of crude oil cannot reduce product prices. Even if it did, foreign producers of gasoline would reduce sales in the U.S. market, thus increasing prices until U.S. and international prices were equalized.

It gets worse: A ban on crude exports would put upward pressure on product prices, for three reasons. First, the reduction in the international supply of crude oil created by a ban on U.S. exports would increase both crude and product prices overseas. Accordingly, product prices in the U.S. would increase because, again, products are traded more or less freely in the world market, creating the one-price outcome described above.

Second, both internationally and domestically, a ban on crude exports would distort the allocation of various types of crude oil among refineries, which are designed in various ways to refine particular crude-oil types more efficiently than others. An export ban on crude would worsen the alignment of refinery and crude-oil characteristics, particularly in the U.S., thus increasing the cost of refining crude oil and producing refined products.

Finally, a ban on crude exports would weaken the exchange value of the dollar, albeit by a degree difficult to estimate given the many factors influencing the dollar exchange rate. However difficult to measure, this effect is real, and thus it would put some upward pressure on the dollar prices of crude oil internationally, and so also the international prices of refined products. A weaker dollar would increase the composite price of the U.S. basket of goods and services, thus reducing aggregate wealth in the U.S.

Over time, the inefficiencies and adverse cost effects of a ban on crude exports would grow, and with them new constraints and prohibitions and perverse policies intended to compensate for the adverse unintended consequences of the prior policy initiatives. The market for petroleum is huge and hugely complex, and no group of policy-makers can possibly understand the ramifications of their policy interventions. Because market forces have powerful profit incentives to improve efficiencies, it is no surprise that artificial constraints imposed by government would have the net effect of increasing prices. It would be far better for Congress to allow the market to work.