Lift the crude oil export ban
LIFTING THE CRUDE oil export ban would be good for the United States. It has the potential to eliminate distortions in the market that cause crude oil in Texas to be priced lower than crude from the North Sea. It would provide greater incentive for drilling, thus stimulating new supply. It would encourage investment in domestic oil and gas rather than investments overseas and would spur hiring in oil and gas and related service industries.
Domestic oil and gas producers are now as close as they have been in the past 40 years to being able to export crude oil. On October 9, the House of Representatives passed Texas Rep. Joe Barton's bill repealing the 40-year old ban on exporting crude oil produced in the United States by a margin of 261 to 153. The bill had bi-partisan support: 26 Democrats joined 235 Republicans in voting to lift the ban. On October 1, the Senate Banking Committee voted to approve a similar bill co-sponsored by Sen. Heidi Heitkamp (D-ND) and Sen. Lisa Murkowski (R-Alaska).
Lifting the export ban is a case of "so close, and yet so far." The measure is likely to face a filibuster by Senate Democrats to prevent its passage. Should Congress pass the legislation, President Obama has promised to veto it, and the 261 votes garnered in the House is short of the 290 votes needed to override a presidential veto.
The White House Office of Management and Budget has said that "Congress should be focusing its efforts on supporting our transition to a low-carbon economy," adding, "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."
Despite the White House's opposition - and mischaracterization of tax deductions available to any US manufacturer - repealing the crude oil export ban is receiving popular support across the country from a broad spectrum of economists, newspaper editorial boards, think tanks, and leaders who understand the benefits that lifting the export ban could bring to our country.
The current downturn has seen more than 250,000 jobs cut worldwide over the past year, and more layoffs are likely. Anything that would add jobs at this point would be welcome news. And there is significant independent research that strongly indicates repealing the export ban would be a job creator.
The Aspen Institute asserts that 630,000 jobs would be created "as the industry expands to meet the new demand from overseas" as a result of lifting the ban. While estimates differ, the Brookings Institution, Columbia University, the Government Accountability Office, and the Council on Foreign Relations all agree that employment would rise. The Aspen Institute further posits that lifting the ban would increase the US gross domestic product by nearly a full percentage point and that real household income would increase between $2,000 and $3,000 per year due to higher employment and lower gasoline prices.
Columbia University says that "crude export restrictions are inconsistent with the US enjoying the benefits of petroleum trade and the US commitment to free and open markets." The Council on Foreign Relations says that "Republicans and Democrats alike, including President Obama, express support for boosting US exports in general. Crude oil should be no exception."
A former senior member of the Obama Administration, Leon Panetta, argues that "The moment has come for the US to deploy its oil and gas in support of its security interests around the world." Panetta argues that if sanctions have to be "snapped back" upon Tehran, it will be difficult for the US to persuade countries that consume Iranian oil to cooperate if we refuse to sell them our oil; plus, selling our oil to our friends and allies in Europe will help them to be less susceptible to coercion from a newly aggressive Russia that threatens Europe with supply disruptions.
The Richmond Times-Dispatch, in an August 11 editorial titled "How about lifting sanctions on America?" says:
"It's time to lift economic sanctions - against America. President Barack Obama already wants to lift economic sanctions against Iran as part of his deal to restrain that country's nuclear-weapons program. Lifting the sanctions will allow the state sponsor of terrorism to rake in billions…(and) enable Iran's authoritarian theocrats to do something America's democratic capitalists can't…The president stridently insist(ed) failure to pass the Iran deal means catastrophe. But the administration has shown zero interest in giving America the same freedom of commerce it wants to give Iran."
These aren't the opinions of so-called Big Oil hacks. These are highly regarded institutions, editors, and policymakers from a variety of points of view and political persuasions who are joined by numerous others around the country who agree it's time to lift the ban on crude oil exports.
The Saudis have the right to sell their crude for whatever price they wish. That's the beauty of free markets. However, should Saudi Arabia, Russia, - and once sanctions are lifted - Iran, be able to increase their market share while producers in the US are blocked from that market? No. Should American oil producers be subject to global commodity prices while they can't sell their crude globally? No. Should the US make it possible for Iran to compete in the global oil marketplace while barring its own producers? Absolutely not. If we really believe in free and open markets, then it's time to lift the ban.
(As of this writing, amendments repealing the export ban have been added to a Senate transportation and infrastructure bill less susceptible to a presidential veto, and opening a procedural window around a Senate filibuster.)
John L. Graves is founder and president of Graves & Co.