Shughart: U.S. must expand crude oil production

William F. Shughart II

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, 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.

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 But Congress must first remove the outdated crude oil export ban.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 Barack 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.”

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.

William F. Shughart II is research director of the Independent Institute and J. Fish Smith Professor in Public Choice at Utah State University’s Huntsman School of Business.