America’s Economic Opportunity

Mark Green
Posted May 6, 2015

The opportunity to stimulate increased domestic production of oil and natural gas, create jobs, spur the economy and enhance America’s ability to positively shape world events is at hand – waiting only on the stroke of a pen. Lifting the United States’ four-decades-old ban on crude oil exports could help advance all of the above, and it all could be launched with the stroke of a pen.

Encana President and CEO Doug Suttles (left) and API President and CEO Jack Gerard emphasized the relative ease with which the 1970s-era export ban could be ended, as well as the building political momentum for action, during a conference call with reporters.

Gerard said the ban could be lifted through the exercise of presidential authority or by the president signing legislation from Congress. Gerard:

“There is a consensus building in the country. We see strong bipartisan support in the House and now rolling in the Senate. So overall, we think the momentum continues to build as people better understand all of the issues. … Job creation, benefit to our trade imbalance, revenues to government, lowering the price at the pump. … It’s just a matter of time now before that pen is deployed to allow this to happen.”

Suttles also noted the benefits that could follow political leadership to allow U.S. domestic crude oil, now shuttered in by the export ban, to reach the global marketplace:

“Literally, with a stroke of a pen we can increase jobs in the United States, we can reduce the price of gasoline in the United States, we can increase investment in the United States, we can increase government tax revenues. How many times have you heard of something like that that will literally occur with a stroke of a pen.”

The answer, here in Washington, is not too many. A wave of studies by a range of organizations have established a fact basis for exporting domestic crude – economic growth, increased domestic production and global market impact leading to consumer benefits. These studies estimate gasoline prices could decline 1.7 cents to 4.5 cents per gallon up to 12 cents per gallon – the antidote to public misperceptions that could make some lawmakers fear political retribution. Suttles:

“There’s been a big education process going (with members of Congress and the administration). ... The point now is to try to get this issue across the line. … Literally, almost instantaneously, you would see instant capital flowing back into the industry. … The good news is there has been a lot of great reception on both sides of the (political) aisle, you don’t see this as a partisan issue.”

Gerard said the challenge is to overcome perceptions with reality:

“In some ways it’s counterintuitive until you begin to understand the facts around crude exports. … They realize this is a positive clear across the board. It’s a little counterintuitive for some when you talk about lowering the gasoline price in the United States by exporting a product. But the fundamental laws of supply and demand take place, putting downward pressure on that global price thus resulting in consumer benefits.”

Suttles, who is approaching two years at Encana’s helm, said lifting the export ban would nearly instantaneously result in more industry investment, increase production and add to tax receipts:

“If we closed the $10 differential between the U.S. and global oil price, about half could be collected through Federal and State taxes and Royalty Owners – helping finance schools, roads and public services. It’s anticipated that the industry would reinvest to increase production, create more high paying jobs across the country and ultimately generate more tax revenue. It’s an economic win for all Americans.”

Conversely, Suttles said, retaining the export ban would fail to recognize the reality of American energy abundance and cost U.S. businesses and taxpayers billions of dollars. “We need to let the market work,” he said.

We’ve noted recently the unique moment in American history that has come thanks to surging oil and natural gas production here at home. The U.S. has become an energy superpower, lowering imports and increasing our energy security – even as energy production has helped fuel domestic prosperity. The energy revolution is ours, a once-in-a-generation chance, as Gerard put it, for America to secure a bright future. The export ban stands as one of a number of impediments to the revolution and its benefits.

Yet, while other issues – such as access to energy reserves and untangling regulatory red tape – will require a number of policy moves, lifting the export ban has a fairly clear, simple resolution – with the right leadership, with forward-thinking action. Suttles:

“America’s energy renaissance over the past decade symbolizes America at its best. Our free enterprise system has supported tremendous home-grown technical innovation and ingenuity. The result is a strong, responsible and innovative energy sector that has turned America into an energy superpower. The benefits are enjoyed by virtually every American. A competitive and successful oil and gas industry is fundamental to the quality of life we all enjoy and take for granted; today and in the future. … However, we need to have the right policies in place so we all can benefit from the potential of our energy resources. In lifting the arcane laws that prevent crude exports, we will create jobs and wealth all across our country in numerous industries, increase state and federal tax and royalty revenues and put money into the pockets of everyday Americans. Lifting the crude export ban is good for consumers, it’s good for jobs and it’s good for government and it’s good for greater investment right here in America.”

With the stroke of a pen …