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Crude Oil Exports Take Center Stage When it Comes to Energy, National Security

“The United States is part of a global system that has a strong presumption against policies of this sort.”                             – Former Treasury Secretary and Harvard Economist Larry Summers, commenting on the crude oil export ban

At a House Foreign Affairs subcommittee hearing this week, members of Congress and expert witnesses testified to the strong energy and national security benefits of crude oil exports – stressing that the United States is a country that advocates for open markets and the same should hold true when it comes to U.S. crude oil export policy.

From the hearing:

  • “The United States should affirm a commitment to free trade and energy and the expectation that trading partners will adopt similar commitments. Additionally, open energy trade is in line with U.S. WTO commitments and will be indispensable in winning potential future natural resource trading disputes.” Elizabeth Rosenberg, Director, Energy, Economics, and Security Program, Center for a New American Security
  • “The United States of America has always been the global leader in advocating for open markets, efficiency and free trade. And we have a little bit of a challenge, there is a little bit of hypocrisy in suggesting to others that they share their riches with the world, but we’re somehow going to hold tight on this commodity.” – Jason Grumet, Founder and President Bipartisan Policy Center
  • “We also want U.S. supply to respond to global circumstances. Consider how OPEC decided in November to let oil prices fall, forcing higher cost producers like the U.S. to cut production instead. We know shale oil can offline very quickly compared to conventional oil, but it can also bounce back quickly, and if the world price were to rise again, such as the 70s, 80s, or 90s, U.S. oil supply could rebound quickly to slow that price rise, to temper the impact on consumers at the pump. But that U.S. supply response may be impeded if we have to sell our oil at the discounted price.” – Jason Bordoff, Founding Director, Center on Global Energy Policy, Columbia University
  • “The geopolitical advantages of American energy exports as a diplomatic tool will both make us stronger economically and provide critical support to our partners around the world.” – Congressman Michael McCaul

While national security and trade were featured prominently at the hearing, Chairman Ted Poe noted that 70,000 Texans have lost their jobs since the decline in rig count began late last year. Due to the ban on crude oil exports, U.S. producers are required to sell the crude oil they produce to customers in the U.S. at a discounted price. The crude oil is then refined into petroleum products and sold on the global market, at global prices. (See more on WTI vs. Brent 101).

Following the House hearing, Senators Lisa Murkowski, John McCain, and Bob Corker published an op-ed in Foreign Policy Magazine calling for an end to the decades old ban crude exports as a means to support our trading partners and allies around the world by providing them with a stable and reliable source of energy.

From the op-ed:

“Today, U.S. allies are once again under threat and, once again, our nation’s resource abundance places us in a position to render vital assistance… The benefits to global security of allowing oil shipments to our trading partners are obvious and indisputable. Our friends in Asia, eager to comply with Western sanctions against Iran, would have a new alternative source for their energy needs.”

Also this week at a Senate Energy and Natural Resources Committee hearing on EIA’s Annual Energy Outlook, committee Chairman Lisa Murkowski noted the link between the U.S.’s own “domestic sanctions” on oil exports and the possibility of additional Iranian oil entering the global market as a result of sanctions being lifted.

Leveraging America’s vast natural resources to advance U.S. foreign policy objectives – while creating jobs and spurring investment here at home –will provide greater stability to energy markets and reduce price volatility while promoting free trade and limiting the geopolitical influence of other large producing countries.

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