When the federal ban on the export of U.S. crude oil was enacted in 1975 the global energy market was a tumultuous place. International pressures and low domestic oil production stoked fears of U.S. shortages, and consequently led the government to enact a ban on the export of U.S. crude oil.
Yet four decades later, the United States is now a global leader in energy production. With crude output up almost 70 percent in recent years the country is now enjoying a domestic surplus. Given the energy renaissance the country is experiencing it is clear domestic shortages are a relic of the past and the ban is no longer justified.
Contrary to the claims of opponents, countless studies show lifting the export ban would reduce domestic gas prices and fuel an economic boom across the country, impacting all states, and not just producers. The primary argument from those opposed is U.S. gas prices would increase. However, this contention is unfounded and, in fact, a new study from the Obama administration agrees.
The study released this month by the U.S. Energy Information Administration (EIA) found that in the United States, “gasoline prices, would be either unchanged or slightly reduced by the removal of current restrictions on crude oil exports.” As the EIA points out, U.S. gas prices are largely set by global oil prices. If the ban were lifted, U.S. exports would increase global supply, which would drive down global prices. As global prices drop, this “in turn results in lower petroleum product prices for U.S. consumers,” the study concludes.
The benefits of lifting the ban do not begin and end with a reduction in U.S. gas prices. A study by the Government Accountability Office concluded that lifting the ban would “increase the size of the economy, with implications for employment, investment, public revenue and trade.” These findings are echoed in more than a dozen other economic studies that found lifting the ban would increase U.S. gross domestic product by hundreds of billions of dollars and add millions of new jobs in the next few years alone.
More importantly, thanks to the country’s sprawling supply chain, benefits would not be relegated to top producing states such as Texas, North Dakota and California. According to a report by ICF International, states like New York, Florida and Illinois would see more than 10,000 new jobs each and roughly a billion in income growth in the coming years. Even North Carolina, Wisconsin and Georgia, with little to no energy production, would each see over 5,000 new jobs and well over half a billion in income growth.
In addition to the recent EIA study, the Obama administration has given hushed support to lifting the ban as evidenced by the recent decision to allow crude exports to Mexico. Even Democratic leaders in the Senate, such as Senate Minority Leader Harry Reid of Nevada and Robert Menendez of New Jersey have shown interest in relaxing the ban.
In the House, Republicans that include Speaker John Boehner of Ohio and Majority Whip Steve Scalise of Louisiana, along with Joe Barton of Texas are leading the push. In a press release following the release of the EIA study, Mr. Scalise noted, “This study by President Obama’s own administration is the latest evidence that it is time to lift the outdated ban.” Mr. Scalise went on to say, “Now we have further evidence to show that lifting the ban won’t raise gas prices and in fact may even help lower the price Americans pay at the pump.”
As lawmakers return to work after recess, the focus this fall should be on free-market policy that cements America’s status as an economic powerhouse and global energy leader. With growing bipartisan support in Congress the stage is now set for lawmakers to do just that by lifting the crude export ban and ensuring American prosperity for decades to come.
• Justin Sykes is federal affairs manager at Americans for Tax Reform.