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Senate Banking Committee Mark-Up: Five Things to Know about Oil Exports

The Senate Committee on Banking, Housing & Urban Affairs is scheduled to mark-up the “American Crude Oil Export Equality Act” (S. 1372) later this morning which would lift the ban on crude oil exports from the United States. To provide context prior to the mark-up here are five things to remember about crude oil exports from the United States:

  1. Iran will soon begin exporting more crude oil when sanctions are lifted as part of the P5+1 nuclear agreement. When sanctions on Iran are removed, the U.S. will be the only major oil producing country that has restrictions on the export of domestically produced crude oil. This places the American economy at a competitive disadvantage as Iran becomes an important supplier to our allies and trading partners.

    Iranian Deputy Oil Minister, Mansour Moazami, has indicated Iran will double crude oil exports to 2.3 million barrels per day soon after sanctions are lifted. Dr. Moazami stated the Iran’s oil export industry is “like a pilot on the runway ready to take off” and the Energy Information Administration has confirmed that when additional Iranian crude hits the global market, U.S. production will be negatively impacted reducing output by some 400,000 barrels per day in 2016 which will threaten U.S. jobs and other economic benefits. News reports from Tehran this week indicate that Iran has struck a deal to sell crude oil to Poland, a key U.S. ally in Eastern Europe and a member of NATO, when sanctions are removed.

  2. The U.S. has abundant crude oil resources; allowing exports will stimulate our economy and protect and create jobs. The U.S. has become the largest petroleum producer in the world due to improvements in technology and new drilling techniques. According to the Energy Information Administration,  proved liquid petroleum reserves reached 36.5 billion barrels in 2014, which is a 14 billion barrel increase from 2009.

    The U.S. can benefit from the phenomenal growth in our petroleum resources by lifting the ban on crude oil exports. As recent study by the Brookings Institution concluded: “Lifting the ban will have a positive outcome for the overall U.S. economy generating lasting long-term benefits through decreases to unemployment and benefits to welfare.” A study by Harvard Business School found that, “Today, the ban on crude exports to almost all countries is reducing market opportunities for producers and reducing U.S. growth, with no clear offsetting benefits for America or Americans. By 2030, oil and gas exports could create an additional $23 billion in GDP and around 125,000 new U.S. jobs.”

  3. Removing the ban would put downward pressure on gasoline prices for consumers. A library of research conducted by academic, economic and public policy experts have concluded that removing the ban on oil exports will lower prices at the pump for U.S. consumers. A recent analysis by the Energy Department concluded that “Petroleum product prices in the United States, including gasoline prices, would be either unchanged or slightly reduced by the removal of current restrictions on crude oil exports.”
  4. Lifting the export ban is good public policy and a win-win for America. Removing the 1970’s era export ban is long overdue and Congress should not need to engage in deal-making to change the current law. Any new taxes on the oil and gas industry, such as a well head tax, would be counterproductive to the meaningful gains to be made from removing the export ban.

    Simply allowing crude oil exports will generate significant new revenue for federal, state and local governments. ICF International found that, “U.S. federal, state, and local tax receipts attributable to GDP increases from expanding crude oil exports could reach $13.5 billion in 2020,” and IHS found that cumulative government revenues from lifting the ban could be $1.3 trillion from 2016 – 2040.

  5. There are considerable U.S. national security and geopolitical benefits to becoming an oil exporter. By ending the export ban the U.S. will be in a position to help provide energy security for our global allies and trading partners, who would no longer be totally reliant on energy supplies from volatile regions of the world that use petroleum as a coercive geopolitical tool.

    In a recent Wall Street Journal oped former CIA Director and Secretary of Defense Leon Panetta, and former National Security Advisor Stephen Hadley wrote: “The moment has come for the U.S. to deploy its oil and gas in support of its security interests around the world…The U.S. remains the great arsenal of democracy. It should also be the great arsenal of energy”

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