Last week on Capitol Hill we witnessed another hearing on crude oil exports, this time in the House Small Business Committee. Recently, Representative Kevin Cramer (R-ND) announced an amendment to the Trade Promotion Authority bill that would repeal the ban on export of U.S. crude oil while Senator Lisa Murkowski (R-AK) proposed a similar amendment to the defense authorization bill. All of this activity leads me to ask the obvious question: why hasn’t our outdated crude oil export policy been changed yet?
Despite emerging consensus on Capitol Hill behind ending the export ban and experts’ efforts to advise policymakers on the issue, special interest groups who gain from the status quo at the expense of American energy consumers still voice opposition to repeal of this antiquated trade policy. Because such groups continue to perpetuate myths of what allowing crude oil exports will mean, it’s important to unveil the truths behind their misinformed policy stance.
- Allowing Crude Exports Would Not Stop Us From Becoming “Energy Independent”
The rhetoric of energy independence distorts the facts of the oil export ban—an easy way to sway public opinion when most voters believe that energy independence is a goal worth achieving. Proponents of the ban allege that it’s wrong for the United States to export its crude oil resources while at the same time importing oil from foreign countries. However, even if cutting our imports was doable, it isn’t something that we should want.
By making ourselves “independent” of the global market we short-circuit the competitive forces that drive energy prices down. As one economist observed, “Money is like blood. It needs to keep moving around to keep the economy going.” The same is true of U.S. oil reserves. Domestic oil markets will be more stable if America is energy secure, not energy independent.
Lifting the export ban does exactly that. At the beginning of 2015, net imports of crude oil from foreign countries were at their lowest level since 1985; there’s no reason that exporting some of our millions of surplus barrels of oil would change that. The real reason for concern, ironically, should be that continuing the ban in the face of lower profits for oil producers will slow production growth—and as a result further increase the country’s reliance on imported oil.
- Crude Oil Exports Will Harm Our Environment
Allowing exports won’t compromise environmental quality either. Environmentalist opposition cites concerns associated with hydraulic fracturing, namely, the fear that it pollutes drinking water. Yet the reality is the negligible environmental impacts have been outlined by both government and non-governmental sources. Notably, the U.S. Department of Energy’s National Energy Technology Laboratory (NETL) released a report late last year that monitored gas wells in the Marcellus Shale and found no evidence of gas or fluid contamination of drinking water aquifers.
In fact, the US oil industry is the leader in complying with environmental quality standards. According to the most recent environmental performance index, we did better than four of the world’s largest oil exporters (Saudi Arabia, the United Arab Emirates, Kuwait and Iraq) in the climate and energy category. Encouraging US oil exports means that more of the world’s oil will be produced in environmentally responsible ways. Every nation will need oil until cheaper, greener and commercially successful energy alternatives become available. Why shouldn’t our oil fill that need?
- Oil Exports Will Harm US Consumers
Finally, claims that lifting the ban will increase fuel prices and allow oil companies to take advantage of their customers is completely unfounded. Any study that forecasts dramatic changes in gas and heating oil prices is making an educated guess (at best). However, a dispassionate application of economic principles finds gas prices would most likely fall, not rise.
Crude oil price benchmarks are set internationally, so allowing the United States to export oil and compete more effectively in the global marketplace will, by adding to supplies, drive prices down. As energy expert Robbie Diamond explained, “Anything from a major weather event, to regional instability, to a terrorist attack, affects prices everywhere.” Therefore, having a secure country contribute to global market supply undoubtedly would reduce price volatility and undercut the influence of other major oil and gas producers like OPEC and Russia.
It’s time for policymakers to place their confidence in the facts and not the fabricated horror stories told by trade protectionists and special pleaders. The major reason we haven’t seen more movement toward repealing the 40-year-old and outdated oil export ban isn’t because it would undermine our energy security or harm the environment and American energy consumers. It’s because a series of widely accepted myths are making Congress hesitant to do the right thing.
