It’s Time to Export American Energy | Commentary

Posted October 17, 2014 at 3:28pm

Try, for a moment, to imagine the world today without the United States oil boom. If the picture seems dire, you’ll know you’re on the right track.

These days, every news cycle focuses on the Israel-Hamas conflict, the spread of ISIS throughout the Middle East, or Russia’s encroachment on Ukraine. Even casual observers notice the turmoil is not only growing, it doesn’t seem to be subsiding anytime soon.

But one thing that has certifiably not become a news story is how much these ever-growing crises are driving up U.S. gas prices or disrupting global energy markets. Thanks to advanced technology like hydraulic fracturing and the American energy boom, that is. Still, if the United States is going to continue to act as the world’s oil-price stabilizer, we’re going to need to make at least one big policy change: Lift the ban on U.S. oil exports.

Today, we don’t necessarily have to make the jump straight from turmoil overseas to gas prices here at home. Many are taking note. Politico, in fact, reported in July that “the mismatch between trouble abroad and pain at the pump is a sharp turnaround from most of the past four decades  . . . ”

Indeed. Earlier this summer the Bank of America Corp. and the International Energy Agency made headlines after declaring the U.S. had officially surpassed Saudi Arabia and Russia in oil and natural gas production in the first quarter of 2014, and was expected to remain in first place the rest of the year. Output of crude oil was exceeding 11 million barrels a day.

“If the U.S. didn’t have this energy supply,” Bank of America’s head of commodities research Francisco Blanch said at the time, “prices at the pump would be completely unaffordable.”

The benefits of lifting the crude oil ban here at home are undeniable. One report estimated that lifting the ban would add more than $1 trillion to government revenues by 2030, cut fuel prices at the pump and create roughly 300,000 more jobs a year.

But while our energy boom will help us reduce our dependence on oil imports to as low as 22 percent by next year (the lowest level in 45 years), it’s time to start thinking bigger. It’s time to start thinking about how our energy boom can help our friends and allies abroad reduce their own imports. It’s not just American motorists who can benefit from our domestic energy boom.

Because the U.S. has been developing our vast natural resources here at home, American energy is stabilizing the global energy markets. If output drops in Libya or Saudi Arabia, the U.S. can pick up the slack.

Take Russia’s stronghold on the European gas market. The former Soviet Union is literally — as Slate declared in a recent headline — Europe’s gas station. According to the Energy Information Administration, oil and gas revenues account for more than 50 percent of Russia’s federal budget.

What’s more, 79 percent of Russia’s crude oil exports in 2012 went to European nations – especially Germany, Netherlands and Poland. Russia also exports 76 percent of its natural gas to Europe. All of that means one simple thing: Europe is highly dependent on Russian energy.

Enter the U.S. ban on crude oil exports. Is it realistic to say the U.S. could fulfill all of Europe’s energy needs without Russia? Probably not. But lifting our ban on exporting oil is a major step in the right direction in helping alleviate dependence on countries who are bad actors on the global stage.

The impacts would not only be immediate, but also long-lasting.

In late July, the Commerce Department, to its credit, approved the sale of unrefined American crude when it allowed a tanker from Texas to set sail for South Korea. Still, it wasn’t without some complicated wrangling of U.S policy loopholes and legalese.

If nothing else convinces Congress to reverse the oil export ban it should be this: The reasons for this 1970s-era energy policy no longer exist. No one is worried about shortages in America’s oil supply. And if we were to experience another Arab oil embargo, it would hardly make a difference. We’d have American energy.

Tom Pyle is president of the Institute for Energy Research.