It is budget season in Washington, which makes for some interesting political theater on Capitol Hill as lawmakers took to the House and Senate floor at the end of March for a marathon voting session. However, the debate didn’t center on members defending the fiscal-year asks, but instead was the same grandstanding we have come to expect during this annual charade. Dog and pony show aside, the process is an important and informative opportunity for lawmakers to work hand in hand with the executive branch to set policy priorities for the year ahead and beyond.
Among the laundry list of issues discussed were a host of weighty energy decisions facing the country today, including exportation of America’s vast energy resources. Under the Energy Policy & Conservation Act of 1975 (the crude oil export ban), the U.S. is unable to export crude oil supplies into the global market. Introduced during a time of energy scarcity, this policy that was once intended to insulate the U.S. from external forces is now a blockade to economic progress.
Over the past decade, improvements in oil and gas extraction have breathed fresh life into domestic energy production and completely flipped America’s energy outlook. Today the United States leads the world in oil and natural gas production, having surpassed countries like Russia and Saudi Arabia. Between 2005 and 2013, domestic energy production increased by more than 35 percent, and it doesn’t show signs of slowing. The U.S. Energy Information Agency estimates production will increase an additional 56 percent by 2040. Furthermore, recent estimates have shown crude oil storage tanks have been filling up at the rate of about 1.2m barrels per day over the past four weeks, and crude inventories are now at their highest relative to demand from refiners since the mid-1980s.
The challenge now becomes securing the infrastructure and policies that can keep up with production and further incentivize investment into this booming industry. While most U.S. refineries are equipped to process heavier foreign oil, they are unable to process the lighter crude pulled from the ground here at home. Instead of letting these resources languish under outdated energy export bans, the United States should be leveraging them in the global market and acquiring the benefits that this policy change will bring to the U.S. economy.
The most recent study detailing these benefits was astounding. The report by IHS, a follow up to their 2014 study, found that lifting the crude oil exports ban would provide an overall boost to the American economy of $86 billion to $170 billion in additional annual GDP, and create between 394,000 and 859,000 new jobs every year nationwide. The study also concluded that the average American worker will experience these benefits, not just the oil industry. With only 10 percent of the jobs created in actual oil production as a result of this policy change, 30 percent would be in the industry’s supply chain, and a majority 60 percent would feed into the broader economy. It is clear lifting the export ban means an unprecedented opportunity for the greater economy that we should not ignore.
The United States is facing a number of important energy issues that will shape our outlook well into the future. As we move forward in the 114th Congress, it is critical lawmakers provide clarity for energy producers and consumers alike on where they stand on this issue. The political and economic landscape of 2015 is vastly different than that of 1975, and it is time that Congress took notice. Through the perpetuation of the export ban the U.S. is unable to take full advantage of our impressive asset. Action by Congress to update policies toward crude oil exports would renew confidence for investors and bring to fruition the profits deserved by American consumers.
