As the 114th Congress convened last month, a new page turned in Washington, D.C., opening up a perfect opportunity for a fresh approach to national energy policy. The United States is in the midst of an energy revolution and our policies must start reflecting that reality.
Unfortunately, much of our energy policy still is mired in the 1970s, when disco ruled and mood rings were the rage. It also was a time when the Organization of Petroleum Exporting Countries decided to flex its muscles, raising the world price of oil 70 percent by cutting production dramatically. Millions of us remember the shortages caused by governmental regulations that prohibited retail prices from rising: limits on how much gas could be bought and long lines at the pump. And, because controls on the prices of crude oil at the wellhead had not been fully lifted, an export ban was imposed to prevent U.S. energy companies from seeking higher prices abroad.
That was then, this is now. Much has happened in 40 years. Retail price regulations were dropped (the lines at gas stations disappeared overnight) and wellhead price decontrol soon followed. But as a nation that relied heavily on oil imports, especially from the Middle East, it was never found convenient or necessary to drop the export ban.
Our energy fortunes have changed. We have discovered new oil and gas reserves right here at home, and we have developed the technology to reach oil deposits previously locked away. The United States has become the world’s largest producer of natural gas, and we are on the verge of being the global leader in oil production as well. Rather than depend on other nations – not always friendly ones – to meet our energy needs, we can embrace the power and influence of being an energy exporter. But Congress must first remove the outdated crude oil export ban.
The economics of lifting the ban are clear, and they are not a matter of political party or ideology. Recently, Tom Donilon, President Obama’s former National Security Advisor, characterized eliminating the ban as the “correct policy decision.” Speaking to the Columbia University’s Center on Global Energy Policy, he said, “Lifting the ban will advance our economy, our energy future, and our foreign policy and national security goals. It is the next step in leveraging our energy posture to protect and to enhance U.S. leadership for years to come.”
Studies by multiple economic think tanks, including the Brookings Institution and the Aspen Institute, conclude that crude oil exports will deliver national benefits in three areas: economic and job growth, balance of trade, and energy security.
A NERA Economic Consulting study for Brookings showed that lifting the crude oil export ban could create as many as 200,000 to 400,000 new jobs and increase gross domestic product by $600 billion by 2020. The Aspen Institute reports that U.S. manufacturers would employ 37,000 more people every year over the next decade if the export ban were erased.
But those benefits decline markedly with delay. Expanding the market for American crude oil now would bring increased domestic production, helping to keep the prices of gasoline and heating oil low and more of those benefits here at home, the Brookings/NERA study reported.
Speaking at the same event as Mr. Donilon, former State Department official Carlos Pascual pointed out that the export ban damages Washington’s credibility on the global stage, particularly when it comes to free trade. Mr. Pascual is correct. Our current policy simply goes against the open international trade policy arguments we have made for years.
Just as important is the power the United States would derive from exporting crude, especially to our allies who now depend heavily on the Middle East and Russia for energy. It certainly is a better way to exert our influence than putting boots on the ground.
Many Americans now favor lifting the crude oil export ban as long as higher gas prices don’t result. (They won’t.) A recent Reuters–IPSOS poll shows that 45 percent of Americans agreed that oil drillers should be permitted to sell domestic oil abroad.
With the House and Senate both focusing heavily on energy initiatives this past month, now is the time to unshackle domestic crude oil producers and allow them to participate freely in the global marketplace. Time is of the essence if we are to capture the benefits of jobs and lower gas and heating oil prices that are sure to follow.
