This week, the White House, along with eleven other nations, announced that negotiations on the Trans-Pacific Partnership (TPP) have successfully concluded with agreement among the participating parties. The agreement, once ratified, will reduce tariffs and barriers to commerce between all twelve member countries and enshrines the economic importance of free trade, which has been a longstanding tenet of U.S. international economic policy.
At the conclusion of the negotiations President Obama stated:
“My approach to trade has been guided by a unifying principle: leveling the playing field for American workers and businesses, so we can export more products stamped Made in America all over the world that support higher-paying American jobs here at home.”
We agree with President Obama, however, when it comes to energy trade, U.S. policy does not align well with the President’s stated position of “leveling the playing for American workers and businesses.” Our domestic energy export policy has not been updated since 1975, meaning the policies that guide us today are the same as those that were enacted following a period of perceived energy scarcity. Today, the U.S. is the only major oil producing country in the world that does not allow exports of crude oil, yet we’re the world’s leading petroleum producer.
While crude oil is prohibited from being exported, U.S. policy does allow for the export of refined petroleum products, such as gasoline and diesel fuel. In fact, in 2014 the U.S. exported $146 billion in petroleum products, accounting for nearly 10% of the total value of products exported from the U.S. The Brookings Institution noted, “[t]he benefits of these exports raises the question of why crude oil should be treated differently from all these other crude-based products, including gasoline.”
Indeed, the White House also notes that every $1 billion in U.S. exports supports five thousand U.S. jobs, concluding that “the more we sell abroad, the more higher-paying jobs we support here at home.”
By this measurement, the White House should be supportive of energy trade, as they recognize full-well the broad-based economic benefits that trade has on our economy
In a speech on energy policy at Columbia University earlier this year former White House National Security Advisor Tom Donilon commented on U.S oil exports, saying:
“The U.S, has consistently opposed efforts by countries to manipulate their exports…By allowing [crude oil] exports, we permit production decisions in the United States to be made fully on the basis of market forces rather than being influenced by artificially imposed regulatory constraints…This in turn will increase diversity of supply, increase competition, reduce volatility and lower prices in global markets.”
As the Obama administration embraces the concept of free trade and greater U.S. exports, it’s important to consider that by allowing the U.S. to export crude oil we could help grow our economy, reduce our trade deficit, protect and create domestic jobs and enhance our national security.
The U.S. approach to international trade policy should be consistent across all goods and services, and if we follow the President’s “unifying principle,” then U.S. crude oil exports should be allowed to compete with countries like Iran and Russia for global market share. To do this, and to fully reap the benefits of our domestic energy renaissance, we must lift the ban on crude oil exports.