Policy first adopted in the 1970s was in reaction to a petroleum shortage that doesn’t reflect today’s production reality
The changing energy landscape and booming oil production throughout the U.S. over the past decade has rendered some major elements of the country’s energy policy —including the 40-year-old ban on crude oil exports — outdated.
Leftover from the oil scarcity of the 1970s, the export ban harms consumers, stunts the economy and threatens national security. Additionally, with broad bipartisan support for lifting the ban, there’s no good reason to keep it in place.
Production of crude oil in the U.S. has risen to more than 11 million barrels per day from about seven million barrels per day in 2008. Output could reach 18 million barrels per day by 2040, according to the Energy Information Administration.
The ban, combined with increased production, has created a significant stockpile of oil throughout the country. Inventories are the highest they’ve been in 80 years, and between 2005 and 2013, imports declined almost 30 percent.
But limits on U.S. producers’ ability to sell in the global market have resulted in less investment in projects. There are 50 percent fewer U.S. rigs than last year.
Lifting the ban would increase domestic oil production, allow the U.S. to infiltrate the global market with its bountiful supply, and thus push gasoline prices further downward — good news for U.S. consumers.
An array of economic studies show average prices per gallon of fuel could go down two or three cents over the next several years, and by 2035 save American consumers up to $5.8 billion per year.
The boon the U.S. economy would experience from an open export policy is obvious. Increased investment, fuel savings for consumers and an uptick in production would boost the GDP by more than $38 billion in the next five years, while lowering the country’s trade deficit by $22 billion, according to ICF International.
Decreased investment in this energy sector has already forced the industry to cut 125,000 jobs. But over the next five years, lifting the ban would add about 124,000 jobs annually that extend into the supply chain beyond oil. It could add up to one million jobs at its peak.
Beyond the huge gains allowing exports poses economically, increased U.S. production would also strengthen the country’s energy independence and national security. Allowing testy regimes with the largest oil reserves — including Russia and countries in the Middle East — to control the international market is poor policy, particularly as Iran is poised to increase production once sanctions are lifted.
The Senate Energy and Natural Resources Committee approved a bill last week that would lift the ban. House Speaker John Boehner has announced his support for lifting the ban.
Lawmakers should press to get rid of this outdated ban and allow the freer flow of such a crucial commodity.