Congress banned crude oil exports in 1975 in response to the Arab oil embargo, which induced oil shortages, greater oil imports, and gasoline lines. That world is no longer with us, as America’s newfound oil abundance has proven that 1970s-era policies are outdated. If outdated policies on crude oil are maintained, the U.S. economy will be significantly damaged and a golden opportunity to reassert America’s standing in the world will have been squandered. The time to change those laws and repeal the ban on crude oil exports is now.
While crude oil cannot be exported, there are currently no restrictions on the export of gasoline, diesel or jet fuel. With America fast becoming the world’s preeminent energy superpower, the reasons for repealing a ban that applies only to crude oil are clear: Numerous independent and non-partisan economic studies have all agreed that repealing the crude oil export ban will lead to more domestic energy production, more jobs, downward pressure on gasoline prices, improvement to the U.S. balance of trade, greater energy security, and would strengthen America’s geopolitical standing around the world.
Repealing the outdated ban on U.S. crude oil exports will unleash the full potential of America’s energy boom, creating hundreds of thousands of new jobs across the United States. According to the Energy Information Administration, from 2007 to 2012 – part of the historic new age of energy abundance in the US – the oil and natural gas industry grew by more than 162,000 jobs, a 40 percent increase. As the Brookings Institution concluded, job creation tied to repeal will be “economy-wide rather than oil industry specific or necessarily new jobs. Rather as the welfare benefits of repealing the ban ripple through the economy, there will be a host of people flocking to new employment opportunities.”
Lifting the ban on crude oil exports will increase investment in the U.S. and generate greater economic growth. According to IHS Energy, ending the ban would “add investment of nearly $750 billion,” and potentially $995 billion in the upstream exploration and production sector. Furthermore, “the higher U.S. oil production resulting from a lifting of the ban will […] increase GDP by $135 billion.” The impact of lifting the ban on crude oil exports would be beneficial for the U.S. economy, workers, and consumers. According to ICF International: “U.S. federal, state, and local tax receipts attributable to GDP increases from expanding crude oil exports could reach $13.5 billion in 2020.”
According to several independent, non-partisan economic studies, as well as a recent study by the U.S. Government Accountability Office, repealing the crude oil export ban will benefit consumers by putting downward pressure on gasoline prices. As the U.S. Energy Information Administration has noted, U.S. gasoline prices are tied to global oil prices. Repealing the crude oil export ban will increase both U.S. oil production and global oil supplies, which, according to the Brookings Institution, “will make global oil prices fall.” This will help lower U.S. gasoline prices. According to global consultancy ICF International, lowered prices as a result of the crude export ban “could save American consumers up to $5.8 billion per year, on average, over the 2015 – 2035 period.” Additionally, IHS Energy, a global consultancy and think tank, concludes that “lifting restrictions on crude oil exports will increase real household disposable income in the forecast due to an investment-led expansion in economic activity and a lower unemployment rate.” As a result, U.S. households will benefit from higher real wages and incomes, as well as increased government revenues, which can be used for infrastructure, schools, and other public services.
Concerns about the ability of the U.S. to produce enough oil and gas are a thing of the past. Technological advances in drilling and related technologies have drastically altered the energy landscape, and what was once considered a dwindling resource is now available in abundance in the U.S. The U.S. Energy Information Administration (EIA) estimates that U.S. total crude oil production averaged 7.5 million barrels per day in 2013, an increase of 950,000 barrels per day from the previous year, driven largely by growth in tight oil production. America’s oil resources are currently producing about 7.9 million barrels per day, which is the highest annual average since 1988. As a result, after decades of vulnerability to supply shocks from foreign sources of energy, this year the U.S. is set to surpass both Russia and Saudi Arabia as the largest global producer of crude oil.
Export of U.S. oil will increase America’s energy independence by encouraging continued investment in – and development of – resources here at home, thereby making America’s new energy abundance a permanent part of the nation’s energy and economic landscape. A report from Columbia University’s Center on Global Energy Policy found that, “Increased U.S. crude production can weaken the economic power, fiscal strength and geopolitical influence of other large oil producing countries” and that lifting export restriction allows “for greater U.S. diplomatic leverage in future application of sanctions or pursuit of other objectives.” Ending the ban also provides energy security for our global allies, who will no longer need to source energy solely from volatile regions of the world. Importantly, as Alaska Senator Lisa Murkowski has said, “This new domestic energy reality allows us to engage the world in a strong way, and to pursue our national security and foreign policy objectives by economic means. Lifting the oil export ban will send a powerful message that America has the resources and the resolve to be the preeminent power in the world.”
The U.S. already allows free trade of transportation fuels, such as gasoline and diesel. In fact, in 2013, the United States sold $150 billion in petroleum product exports – the largest in the world – providing, as Brookings noted, “a financial boon to the U.S. economy.” According to ICF International, lifting crude oil export restrictions could narrow the U.S. trade deficit by $22.3 billion in 2020. Moreover, thanks to new technologies allowing producers to realize the benefits of American energy abundance, the amount consumers paid for imported oil has declined considerably. In 2013, according to IHS Energy, the United States paid $218 billion for imported petroleum, a 30 percent decline from 2011. Repealing the crude oil export ban would increase this positive trend.