Oil export ban from 1970s is holding America back
The 2015 Offshore Technology Conference is set against a backdrop of a significant commodity price correction and the associated uncertainty. As we’ve all been reminded recently, the only certainty in our business is that we work in a cyclical commodity industry and that low oil prices, as much as high oil prices, are a fact of life. Effectively managing through any commodity price cycle demands careful, focused decision-making that addresses near- and long-term considerations.
Ten years ago it was unthinkable that America could achieve energy security and be poised to become a net energy exporter. The unprecedented growth in shale energy complemented by the resurgence of the Gulf of Mexico has reshaped the global energy supply picture. The shale revolution has been among the greatest achievements in the history of American oil and natural gas, and stands as a testament to the spirit of technological and engineering innovation exemplified by the men and women of this great industry. American innovation has once again changed the game entirely.
But U.S. policies haven’t kept up. The 1970s-era policy that bans oil exports is antiquated and rooted in a time of scarcity, not abundance. To put it simply, the policy is destroying value and negatively impacting our economy, consumers and producers alike. Even in a time of low crude oil prices, addressing the crude oil export ban is crucial to our country and our allies around the world.
Lifting the ban would help strengthen the U.S. economy, foster job creation, advance foreign relations goals and promote the efficient development of the domestic energy sector. According to IHS Energy, ending the ban would “add investment of nearly $750 billion,” and moreover, “the higher U.S. oil production resulting from a lifting of the ban will … increase GDP by $135 billion.”
Importantly, this would occur with no negative impact on the U.S. consumer. On this point, numerous independent studies — including those from the Brookings Institution, Columbia University, Heritage Foundation, U.S. Energy Information Administration and U.S. Government Accountability Office — have found that the price at the pump will actually decline if the ban is lifted.
In fact, refined petroleum product prices are already a function of the global crude oil market. In other words, the prices U.S. consumers pay at the pump are based on the global price of crude oil, not the price of U.S. produced oil.
But U.S. policy limits access to the global market for crude oil and, by doing so, limits our opportunity for further growth. Allowing U.S. producers to receive the most competitive price for our product is fundamental to ensuring the economic viability of domestic production — both onshore and offshore.
We’re a nation with a history built on free trade, and the American independent producers who pioneered the shale revolution are simply asking to let our barrels compete in the global market.
The answer is clear — allowing producers to sell crude on the global market is a win-win for the U.S. economy and our national security. It will benefit the consumer, encourage further investments in oil and gas production, and create more jobs and other economic benefits. It is a historic opportunity for our leaders in Washington to take action and support a more secure energy future for all Americans.