The ‘Us vs. Them’ Fallacy on Oil Exports

Mark Green
Posted October 29, 2015

Lacking factual, substantial reasons for keeping the United States’ antiquated ban on crude oil exports, those who oppose letting U.S. crude reach the global marketplace are left to make a non-factual, unsubstantial case instead.

In a letter to the editor in the New York Times, the Sierra Club’s Michael Brune offers up a couple of scary fictions – in time for Halloween – to distract Americans from the stark, “off oil” agenda that Brune and many others advocate: a harsher, less healthy, less hospitable world minus the reliable, affordable fuels that are fundamental to modern living.

API President and CEO Jack Gerard recently called them out for the false choice that’s central to their advocacy:

“There is a vocal minority who believe that instead of growing our economy to lift people out of poverty we should reduce our current standard of living and cap our potential. We reject this notion and encourage policy makers to continue down the path we have shown to work, supplying abundant, affordable, and reliable energy to consumers while lowering our impact on the environment.”

As for crude oil exports – every major study has found that exporting U.S. oil would be a boon for America and Americans:

Consumers – Exporting domestic crude would put downward pressure on U.S. gasoline prices, the studies say, ranging from a penny per gallon (U.S. Energy Information Administration) to 5 to 10 cents per gallon (Congressional Budget Office) to up to 12 cents per gallon (Brookings/NERA).

Jobs/economy – Exporting domestic crude would create up to 300,000 jobs and increase U.S. GDP by $38.1 billion in 2020, according to an ICF study. A study by the Aspen Institute/MAPI estimates 630,000 jobs would be added at peak in 2019. Brookings/NERA says lifting the ban will boost “U.S. economic growth, wages, employment, trade, and overall welfare.” IHS’ study:

Lifting the 1970’s-era restrictions on U.S. crude oil exports would lead to further increases in domestic oil production, resulting in lower gasoline prices while supporting nearly 1 million additional jobs at the peak . … It would lead to a total of $746 billion in additional investment during the study period (2016-2030) …

Domestic energy – Allowing U.S. oil to reach the global marketplace, to compete fairly with crude from other countries, would end the disincentive to domestic production posed by the export ban. That is, accumulating volumes of domestic light oil no longer would be closed off from the global market, a discouragement to domestic production as detailed in a Rice University study. ICF projects that by allowing crude exports, domestic oil production could increase up to 500,000 barrels per day by 2020. EIA estimates an additional 470,000 barrels per day.

Security – As the world’s No. 1 producer of oil and natural gas, the United States should be actively engaged in global energy markets. Lifting the oil exports ban would allow the U.S. to help diversify and balance the world crude oil market – to America’s benefit and the benefit of America’s friends, a number of whom have called for lifting the export ban. Columbia University’s Center on Global Energy Policy:

Allowing exports would make the US more resilient, not less, to supply disruptions elsewhere in the world. Greater integration into global markets would make US oil supply more responsive to international market developments, mitigating the impact on American consumers and the US economy of production losses in other countries. … Increased US crude production can weaken the economic power, fiscal strength and geopolitical influence of other large oil producing countries.

Michele Flournoy, President Obama’s former undersecretary of defense for policy, in congressional testimony this summer:

“[W]e should not underestimate the degree to which becoming an oil exporter could impact perceptions of the United States as a vital global power, helping to discredit erroneous narratives of U.S. decline. … When more supply originates from producers who are not vulnerable to political instability, conflict or threats to their energy infrastructure, the overall market becomes more stable. … [A]llowing U.S. oil exports would enhance the energy security of key U.S. partners, from Poland to India to Japan. Indeed, our closest allies in Europe and Northeast Asia would welcome – and have asked for – the unrestricted export of U.S. crude oil. … Enabling U.S. oil exports would strengthen our geopolitical influence, leadership and leverage with allies and adversaries alike.”

We could go on, but clearly, lifting a 1970s-era oil export ban that no longer benefits the U.S., our economy and our standing in the world would be a boon to America. The current debate over crude exports is about getting a policy that matches the new realities created by the ongoing American energy revolution – specifically, ending an exports policy that hinders the revolution.

As we say, a number of opponents of domestic oil exports are simply against oil, offering no realistic plan for the future that credible forecasts (see here, here and here) say will see the world continue to use oil and natural gas as primary fuel sources – because they’re energy-rich, reliable, scalable and beneficial.

We hear Brune and others talking about climate and air quality issues – yet our industry is actually taking action on them, investing $90 billion in emissions-reducing technologies from 2000 to 2014. That’s nearly as much as all other U.S.-based private industries combined and more than twice the amount invested by the next two individual sectors – the auto industry ($38.2 billion) and the electric utility industry ($37.1 billion). Industry is leading the way, as well, by developing America’s vast natural gas reserves, the increased use of which has played a major role in reducing power sector carbon dioxide emissions to a 27-year low.

So, opponents of industry need to drop this “Us vs. Them” rhetoric, which willfully ignores what industry is doing to safely, responsibly power America – while creating jobs, boosting the economy and providing important benefits to its true owners: millions of regular Americans.

The U.S. energy revolution is a broad, dynamic, historic success story, not the misfortune some try to claim. It’s authored in large part by an innovative industry sector that’s deeply invested in America and is robust enough to safely develop the fuels Americans count on today and tomorrow. Exporting U.S. crude oil – along with increased access to domestic energy reserves, commonsense regulation and workable leasing and permitting structures – would be an integral part of extending that success story, for all Americans.