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To maintain this momentum, it’s time to end the 40-year old ban on oil exports. If companies can sell on the global market, they will have a greater incentive to develop more American energy.
The Washington Post’s Robert Samuelson makes the case for lifting the ban:
If you want companies to search for oil, you have to provide them with a viable market where they might profitably sell it. As output has increased, this has become a bigger issue. Here’s why.
The new oil consists mostly of “sweet, light” crudes, meaning they have a low sulfur content and are less dense than “sour, heavy” crudes. The trouble is that many U.S. refineries have been designed to process heavy, sour crudes and, therefore, aren’t suitable for the new oil. At the end of 2013, the United States had 115 oil refineries capable of processing about 18 mbd, according to a report from the Congressional Research Service. About half were fitted for sour and heavy crudes. That’s especially true along the Gulf of Mexico coast, where more than half of U.S. refining capacity is located.
The result is that more and more new oil is chasing less and less usable refining capacity. Refineries’ bargaining power rises. Producers have to accept price discounts to sell their oil.
He goes on to point out that by maintaining the export ban, “producers will be discouraged by an oil market that seems rigged against them. They will react by slowing — or possibly stopping — new exploration. The oil boom will ebb or end.” And with it will go the jobs and economic growth.
Research supports the argument that allowing American oil to be exported will mean more jobs and investment. As I wrote in May:
A study by IHS concludes that opening markets for U.S. crude would spur domestic investments oil production. From 2016-2030 an additional $746 billion would be invested and an additional 1.2 million barrels per day of oil would be produced per year. This would translate into an additional 394,000 jobs per year with a peak of 964,000 in 2018.
We’ve gone from worrying about energy scarcity and rising oil imports to supporting America’s energy abundance. Times have changed, and policies must follow.