The Growing Case for Ending the Crude Oil Export Ban | Commentary

Posted July 6, 2015 at 1:41pm

The advantages of lifting the ban on crude oil exports are not just theoretical talking points discussed in the halls of Congress, but rather supported by a large and growing body of research by government agencies, academic institutions and think tanks across the political spectrum. The latest is a study released by the Harvard Business School and the Boston Consulting Group. It highlights the obvious benefits lifting the ban will have on American families and businesses, our economy and global allies.

The study discusses the changing U.S. energy landscape and the opportunities made possible by America’s new energy abundance. The fear of a crippling dependence on foreign oil that existed in the 1970s, when the export ban was put in place, is no longer applicable today. In fact, the U.S. is now the world’s top petroleum producer largely due to our recent ability to produce oil and natural gas from shale formations. The world has changed drastically in the past 40 years and it is time for our policies to accurately reflect the current conditions in which we now live. We must embrace the United States’ new leading role on the world energy stage and recognize the value it would create in our everyday lives.

This point is emphasized in the HBS and BCG study, which recommends “eliminating outdated restrictions on gas and oil exports” that are “based on circumstances in the 1970s that since have been reversed.”

The study also highlights the economic benefits of lifting the ban, providing further data and research that should help alleviate the concerns of those who continue to support the status quo.

First, lifting the ban will lower, not raise, domestic gasoline prices. This is perhaps the top issue raised by many of our colleagues who are understandably concerned with how a change in policy could affect prices at the pump back home. But numerous studies have shown lifting the ban would put downward pressure on domestic gasoline prices. The HBS and BCG study explains: “Crude oil exports increase the competitiveness of domestic oil production without affecting U.S. consumers.  . . .  The overall effect of lifting the oil export ban could actually reduce global prices for gasoline by increasing the global availability of crude oil.” This is consistent with findings from Columbia University that lifting the ban could save consumers as much as 12-cents-per-gallon and a number of other studies that reached similar conclusions.

Second, lifting the ban creates new world markets for the light crude oil being produced in the United States. To many, the notion of exporting American oil to foreign countries seems illogical because American produced oil should be consumed here at home. It’s an easy argument to make and an easy talking point for people to understand. However, it’s overly simplistic and ignores the complex realities that exist in regards to different grades of crude oil and refinery capacity.

This latest study, authored by one of the most respected economists in the world, helps explain this point: “The U.S. has a domestic mismatch in the types of crude produced from U.S. basins and the crude types required by U.S. refiners. Unconventionals skew U.S. supply toward light grades, but U.S. refineries have been built to operate with a mix of light and heavy crude oils.” In other words, it is not economically feasible for the U.S. to refine and consume all of the oil we are producing here at home. Lifting the ban would allow the U.S. to export some of this light crude, while importing heavy crude that our refineries are better equipped to process. The result would be an increase in the global oil supply and increased energy security.

Finally, lifting the ban supports free-trade policies. Trade is a crucial component of our economy and necessary for American businesses to remain competitive and create jobs. Just as our economy and U.S. industries benefit from the free trade of automobiles, computer software, fruit, vegetables, gasoline and other commodities, so would we benefit from trading crude oil. The study notes that “export bans are inconsistent with longstanding U.S. trade policy and undermine U.S. efforts in opening markets generally, which benefit U.S. producers and consumers across all industries.”

Many in Congress have been carefully exploring the issue of crude oil exports and working to better understand the impacts a change in policy would have on our economy and constituents. Support continues to grow. Our bipartisan bill, HR 702, now has 70 co-sponsors representing 29 states and similar legislation in the Senate has the support of 14 senators from both parties. They understand that lifting the crude oil export ban is a win for our economy and consumers. Academics and business leaders have testified at numerous hearings on Capitol Hill and they confirmed, almost unanimously, that it will create jobs, increase U.S. oil production, lower gasoline prices and strengthen our national security.

We will continue to push our colleagues and the president to take action to end the decades-old ban on oil exports and make the U.S. a global energy superpower. Anything short of repeal would be a missed opportunity.

Rep. Joe L. Barton is a Republican and Rep. Henry Cuellar is a Democrat. Both are from Texas.