America’s crude petroleum export ban is an antiquated byproduct of the 1973 Arab oil embargo. Repeal is long overdue.
Hydraulic fracturing (fracking) has sent U.S. oil, natural gas, and propane production soaring. Natural gas output is up 36% since 2005. Oil output is expected to increase another 780,000 barrels per day (BOPD) in 2014 and reach 9.6 million BOPD by 2019. The United States is now importing half of what it did in 2005.
All this activity has created millions of oil patch and downstream jobs. Royalty and tax revenues have skyrocketed, and cheaper natural gas fuels and feed stocks have fostered a manufacturing and petrochemical renaissance.
Expanding natural gas use has also reduced carbon dioxide emissions, which should encourage people who still worry about “dangerous manmade climate change.”
Increased production has also enabled companies to export more gasoline, kerosene, jet fuel, lubricants, and other finished products, since refined product exports were never prohibited. Indeed, U.S. refining capacity is at record levels.
However, because they were designed to process heavier crude oils, refineries are limited in how much domestic sweet crude they can handle. Exports would provide an important outlet for excess crude supplies. That in turn would encourage additional exploration and production, protecting jobs, further revitalizing our economy, and multiplying royalty and tax revenues.
That exploration and production must go beyond state and private lands, though. Opening more federal onshore and offshore lands to leasing and drilling is essential and would magnify these benefits many times over. These resources belong to all Americans, not only to those who oppose fossil fuel use.
In many cases, adding fracking to the equation would expand supplies even further, by making otherwise marginal plays more economic to produce, reinvigorating old oil and gas fields, prolonging oil field life, and leaving fewer energy resources behind in rock formations.
Asia needs the energy to fuel its growing economy and support its still inadequate petroleum production infrastructure. Most of Europe’s natural gas comes from Russia, which charges high prices, engages in energy blackmail, and is rattling sabers in Crimea, Moldova, and Ukraine.
Right now, many European countries prohibit fracking, and EU climate and renewable energy policies have sent business and family energy prices into the stratosphere, killing jobs and preventing families from heating their homes properly.
Expanding domestic U.S. oil and gas production and exports would aid EU workers and families, while also improving America’s gross domestic product, balance of trade, national security, job growth, and prestige. Contrary to what some have argued, American consumers would also benefit, because exports would help stabilize global supplies and prices, keep OPEC and Russian price hikers at bay, and make the United States less reliant on imports and less vulnerable to supply disruptions.
What actually hurts consumers are government and environmentalist opposition to leasing, drilling, fracking, pipelines, and hydrocarbons – and their support for expensive, land-intensive, water-hungry, lower-energy-content ethanol and biofuel “alternatives.”
It is possible that the current $9 per barrel difference between U.S. and global oil prices could shrink slightly if some oil is exported. Barclays Bank says eliminating the export ban could add $10 billion a year to overall national gasoline costs.
The consumer impact of America’s massive land and petroleum resource lockdowns is much higher.
Of course, realizing these benefits requires producing more, ending the export ban, and building more pipelines, natural gas liquefaction plants, and shipping facilities. That can and should be expedited.
Europe can and should produce more of its own oil and gas. It has vast petroleum potential waiting to be tapped via fracking. Opposition to producing this petroleum is no more ethical than environmentalist demands that the United States keep its own enormous untapped petroleum supplies locked up, while we deplete other countries’ assets and put their wildlife habitats at risk from production-related accidents.
Nor is it ethical or sensible for President Obama to ask Saudi Arabia to send us more oil, rather than telling his energy and environment regulators to foster more production here at home.
In short, America should produce more here at home, export both crude and refined petroleum to Europe and Asia, and support companies that want to take their fracking technology and expertise overseas.
These actions will benefit American companies, workers, families, consumers, balance of trade, environmental quality, and government revenues. We must not let anti-hydrocarbon ideologies or misinformed policy positions perpetuate this antiquated ban.
NOTE: This article first appeared in Investor’s Business Daily.