Keep Crude Exports Debate Focused On Jobs, Security

on October 16, 2015 at 2:00 PM

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Last week’s bipartisan U.S. House vote to end America’s 1970s-era ban on crude oil exports is stirring needed debate over U.S. energy and trade policy as the exports issue advances in Congress. Unfortunately, much of the conversation remains focused on the wrong things.

For example, export opponents continue to say the United States shouldn’t export crude oil as long as it’s an oil importer. We rebutted that economically faulty position here.  Access to global markets means bringing overseas wealth to the United States. Conversely, shutting in a domestic commodity is an obstacle to production and economic growth. The oil imports/exports threshold is one that isn’t applied to other domestic goods – and for good reason: Access to global markets is good for domestic producers.

Some claim that domestic crude oil is different for national security reasons, that hoarding U.S. oil makes America safer. Yet, when you look more closely, security considerations favor resuming U.S. oil exports. Studies show that exports will stimulate domestic production, which has reduced net imports and increased U.S. security. At the same time our security in the world will grow by strengthening our friends abroad who want American oil on the global market. Global stability – which makes America safer – will be aided with U.S. oil diversifying and stabilizing world crude markets.

Now, another claim is that even if the export ban were lifted, global crude prices are such that U.S. oil might not find much overseas demand – a short-term approach to the issue instead of long-term policymaking. Still another claim is that ending the export ban serves to benefit “Big Oil.” As detailed here, that’s the kind of “populist” attack that actually takes aim at the American populace.

Policymakers should look beyond the various feints of export opponents and focus on what’s best for America – which is resuming the export of domestically produced oil. Study after study has said that exports would benefit consumers, the U.S. economy, the domestic energy sector and America’s allies overseas.

The effort to lift the export ban will be helped by understanding that the current debate really centers on resetting the default on U.S. oil export policy to where it was for decades before the ban was imposed in the 1970s, discussed in this post. It’s also about reestablishing consistency across U.S. trade policy, which historically has rested on the belief that markets should be allowed to work – and that when they do, the United States wins.

Instead of being the only country that sanctions itself from joining the global crude oil market, the U.S. should be an active participant – which befits the United States’ status as the world’s No. 1 producer of oil and natural gas.

Last week’s House vote is a key step forward on energy, jobs, free trade and U.S. security. It needs to be followed up by Senate action with an eye on trade benefits, U.S. competitivenessand economic leadership. “The passage of this legislation gets us one step closer to leveling the playing field so that domestic producers can compete in the global marketplace,” Dave Hager, Devon Energy CEO, told the Wall Street Journal. API President and CEO Jack Gerard after last week’s vote:

Ending the export ban “puts us on a path to energy security, specifically national security, allowing us to compete with nations like Iran and Russia. It’s difficult for us to understand why this administration would work so hard to lift sanctions for Iran while at the same time resisting and keeping in place sanctions on America.” 

By Mark Green

Originally posted October 13, 2015

Energy Tomorrow is brought to you by the American Petroleum Institute (API), which is the only national trade association that represents all aspects of America’s oil and natural gas industry. Our more than 500 corporate members, from the largest major oil company to the smallest of independents, come from all segments of the industry. They are producers, refiners, suppliers, pipeline operators and marine transporters, as well as service and supply companies that support all segments of the industry