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Never mind that domestic oil production is near record highs, if now isn’t a good time to rethink the 40-year-old oil export ban, when would a better time be?
Yet even though the economics make sense, the White House has threatened to veto legislation lifting it:
But in a formal “statement of administration policy,” the White House’s Office of Management said “legislation to remove crude export restrictions is not needed at this time.”
If President Barack Obama were presented with the legislation, “his senior advisers would recommend that he veto the bill,” the OMB said.
“Congress should be focusing its efforts on supporting our transition to a low-carbon economy,” the office said. “It could do this through a variety of measures, including ending the billions of dollars a year in federal subsidies provided to oil companies and instead investing in wind, solar, energy efficiency and other clean technologies to meet America’s energy needs.”
With domestic production near record highs, if now isn’t a good time to rethink this policy, when would a better time be?
More sensible minds that have looked at current oil markets see it differently.
USA Today’s editorial board calls for lifting the ban, writing, “Four decades have passed since the energy crisis. It’s time to adopt policies that fit the times.” The editorial explains how doing so will support domestic production and jobs:
The price of global oil is now about $6 to $8 per barrel higher than the domestic benchmark known as West Texas Intermediate. This discrepancy stems from a mismatch between the type of oil being produced and the type of oil that domestic refiners are designed to process.
The lower prices domestic producers get is a serious problem at a time when falling oil prices are wreaking havoc on oil industry that had been on a roll. The Energy Department has twice cut its estimates for June oil production, shaving some 250,000 barrels a day, or about 2.7%, off the total. This is mostly the result of a global oil glut. But the inability of producers to get a fair price in a tough market makes matters worse.
USA Today joined other media outlets calling for lifting the outdated export ban.
- Earlier this year, The Wall Street Journal editorial board warned that the ban was “one of the biggest threats to this U.S. production boom.”
- In 2014, The Washington Post editorial board noted the energy security benefits: “[E]xpanded exports would encourage the development of oil fields and transport infrastructure, which would help the country weather some disruption in the global oil trade.”
As I’ve previously written, lifting the ban will mean more jobs (as many as 859,000 annually), a stronger economy (as much as $1.8 trillion added to GDP), and lower gas prices.
Let me emphasize this last point. Every study that has looked at this has found that lifting the oil export ban will not raise gasoline prices.
One more point to make. At the same time the White House announced it wants to keep export restrictions on U.S. oil, it’s been pushing for expanded trade on other fronts.
“It’s discouraging to see this White House negotiate a Trans-Pacific trade agreement and authorize Iran to export its oil, while America’s energy producers are left tightening their belts and shutting down their rigs,” said Barry Russell, president of the Independent Petroleum Association of America. “Shouldn’t American companies have the same access to global markets?”
Indeed. It doesn’t make sense to keep treating oil differently than any other commodity.
Think about this, we could see Iran sell oil on the world market while U.S. producers are locked out by their own government.
Congress should lift the oil export ban, send it to the President, and see if he’ll follow through on his threat. After 40 years, it time for a change.