Ending the oil export ban will be a positive triple play for the economy: Lower fuel prices; more jobs; and more economic growth.
In a report for the American Council for Capital Formation (ACCF), Margo Thorning and William Shughart looked at recent studies on the effects of lifting the 40-year-old ban on exporting American crude oil. Their conclusions are summed up in three points:
- Lower gas prices.
- More jobs.
- More investment and economic growth.
Lower Gas Prices
Thorning and Shughart briefly explain how world oil markets work:
Basic economic principles would dictate that if we diversify supply and increase the amount of crude oil flowing into global markets, assuming international demand remains constant given the integration of efficient technologies, the world price of crude would fall.
Because U.S. gas prices are tied to the international price of oil, we will see lower prices at the gas pump.
How much? Anywhere from $0.02 to $0.12 a gallon. One study by ICF International estimates consumers will “save up to $5.8 billion per year, on average, from 2015 to 2035 as a result of lowered prices on all petroleum products.”
Lifting the export ban would open up new markets for American energy companies to sell oil. This will stimulate more investment in energy development, creating jobs.
On the low end, the Brookings Institution estimates 200,000 new jobs per year, the Aspen Institute predicts 630,000 more jobs by 2019, and IHS estimates 859,000 jobs annually.
What’s more, these jobs won’t just be in the energy sector:
Looking at various sectors and timeframes, the Aspen Institute forecasts that new construction will result in 216,000 new jobs by 2017; the manufacturing sector will gain an average of 37,000 jobs per year through 2025; and, finally professional services related to the oil and fuels sector will increase by an average of 148,000 jobs per year through 2025.
More Investment and Economic Growth
More investment and jobs will mean more economic growth.
IHS estimates an increase of $86 billion - $170 billion annual in GDP from 2016 to 2030, while the Brookings Institution estimates that from 2015-2039, we could see as much as $1.8 trillion added to the economy.
Lawmakers, take note. Everyone who has seriously looked at lifting the oil export ban has come to the same conclusions: Both gas consumers and America’s domestic energy producers will win.