The People of America's Oil and Natural Gas Indusry

Lift the Oil Export Ban, Strengthen America

Mark Green

Mark Green
Posted September 15, 2015

So here we are: Legislation that would end America’s 40-year-old ban on the export of domestic crude oil is moving through Congress – and better, there’s bipartisan momentum behind it.

Resistance to lifting the crude exports ban has no credible footholds – reflecting the breadth of the economic analysis supporting exports. There’s also the realization by most Americans that our country’s ongoing energy revolution has pretty much dashed the 1970s-era justifications for excluding American energy from the global marketplace, where it could be positively affecting global crude markets, stimulating production here at home and providing real energy aid to America’s allies.

So where do export opponents camp out, consumer costs? They can’t stand there. Every major economic study has found that exporting U.S. crude will put downward pressure on U.S. gasoline prices, producing savings ranging from a cent per gallon up to 12 cents per gallon:

consumers

Isolationism, the notion that America should hoard its energy assets and that the U.S. can’t export oil while it’s an oil importer? This runs counter to the basic principles of economics and trade, ignores U.S. export history and denies the United States’ appropriate and beneficial leadership role as an energy superpower. Brookings’ Energy Security Initiative:

Our analysis shows categorically that the crude oil export ban does not, and for some time has not, advanced U.S. energy security. To the contrary, our analysis shows that lifting the ban will increase U.S. oil production, diversify global supply, reduce U.S. gasoline prices, and provide net benefits to the U.S. economy. … As a leader in world trade circles, where the U.S. is a consistent advocate for open markets and transparency, continued restrictions on crude oil exports have the potential to tarnish U.S. global standing while hindering its pursuit of energy security. Allowing crude oil exports is in the national interest. … [W]e find the ban an anachronism that has long outlived its utility and now threatens to impair, rather than protect, U.S. energy, economic, and national security.  

heidiSo what, then? U.S. Sen. Heidi Heitkamp of North Dakota, speaking at an event highlighting the impacts of the U.S. oil exports ban hosted by National Journal, said there’s a larger agenda at work:

“All of the arguments you will hear on the other side of this are really about we don’t want any development of any fossil fuel in any way shape or form, and we are not going to adopt any policy that promotes domestic drilling. Fundamentally, that is the argument. I can appreciate that, that’s their argument. It doesn’t make a lot of sense in my world. But just say what it is, that this is all about never drilling another barrel of oil in this country and really in the world, eventually.”

Heitkamp and Sen. John Hoeven, also of North Dakota, touched on a number of points that argue for a U.S. exports policy based on global market realities and American interests. Heitkamp:

“Fundamentally, commodities have to find their market. If we are going to be successful in America, if we are going to be successful tapping in to a global economy where 95 percent of all consumers live outside the United States of America, we cannot irrationally restrict exports – of anything. And certainly, in this world where we are becoming a dominant energy power, we certainly should not be doing it in energy.”

Certainly, policymakers in Washington have to chart an energy path for the country that is logical, not ideological. Energy policy must make sense – especially in the wake of surging domestic oil and natural gas output that has made the U.S. the world’s largest producer. Along with opening access to domestic reserves and common-sense regulation, lifting the oil exports ban belongs to a worldview based on energy abundance, not one that looks back to the scarcities of the 1970s. Heitkamp:

“There is absolutely no logic to not lifting this ban. There’s no good public policy reason for not lifting the ban. … This is good for consumers. It’s good for jobs. It’s good for energy security.”

Hoeven said exporting crude is key to sustaining and growing domestic production and allowing U.S. producers to compete fairly with other suppliers around the world. Hoeven:

“Quite simply, the impact of the oil export ban is that it prevents our domestic energy industry from competing on a level playing field in the global markets. It’s that simple. In essence, our energy industry is penalized or they’re not able to compete fairly in the global marketplace. And so when we talk about lifting the oil export ban, we’re talking about creating a level playing field so that American energy companies can compete on a fair base, on a level playing field, on the world stage.”

Domestic oil production, spurred by access to the global marketplace, means economic expansion and greater prosperity here at home. Hoeven:

“If we have a growing, expanding, thriving energy industry, we’re producing more oil and gas in this country that leads to more jobs. Good-paying jobs of all kinds. Everything from roughneck out there at the well head to the petroleum engineer to the marketers and across the board. More economic growth for the whole country. … And remember, energy is a foundational industry. All other industry sectors need energy, right? So when we have a thriving, growing, strong energy industry in this country that helps the rest of our economy as well.”

exportsOn oil exports, the path ahead for the U.S. is clear: Lift the ban. The logic for ending the ban summons policymakers to think globally, to look forward instead of backward. It rejects an outlier formulation that exports will negatively impact consumers, put forward by exports opponent Sen. Edward Markey of Massachusetts, the third speaker at National Journal’s event. Take another look at the chart above and the range of organizations – including the U.S. Energy Information Administration – that have produced studies supporting U.S. oil exports. Old fears shouldn’t dictate new energy policies, including policy on oil exports. API President and CEO Jack Gerard:

“There’s a variety of studies out there, and the overwhelming evidence shows that lifting the ban on crude oil exports is positive for the American economy.”

  • (Photos by Kristoffer Tripplaar)

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.