Very rarely does Congress put the level of effort and attention into one topic as they have in debating domestic energy exports. But rightfully so. The shale oil and natural gas revolution has dramatically changed the U.S. energy portfolio in ways most could not have predicted and our current policies tuned to the notion of scarcity are no longer realistic.
It seems Congress is now slowly coming to the realization that our policies must now reflect the reality of our energy abundance. . And while multiple studies have exhaustingly detailed the significant economic benefits – increased jobs and lower fuel prices – that will likely follow, it’s also clear that our foreign allies who would also benefit from a more stable and diverse global market supply. Last year’s crisis in Ukraine served as a wakeup call for the U.S. It’s clear that our leadership is lacking from the global energy debate and we must decide what role we want to play in promoting and protecting domestic and foreign policy interests.
Ending the decades-old crude oil export ban and expediting liquefied natural gas (LNG) export permits to non-free trade agreement countries are two immediate steps the Administration could take that would signal to the global marketplace, we are ready to step in. Rather than restricting trade of our energy resources, we must take a leadership role in influencing the future of the global energy market and use our abundant reserves to further global economic growth and security.
Yet despite clear domestic and international rewards of free trade, efforts to change our export policies are still heavily resisted by special interests. But unrecognized by many are the serious implications and unintended consequences that maintaining these unilateral restrictions have on a global scale.
A recently released report discusses how these protectionist energy policies – including trade controls on energy exports – not only put our global leadership and credibility as a reliable trade partner in jeopardy, but also negatively impact the economic and energy security of our allies.
Exporting these critical resources into the global marketplace has the potential to act as the shining light in a time of geopolitical uncertainty that will strengthen strategic ties with allies in Europe and Asia. Key allies in Asia such as Japan, South Korea, and Taiwan are each more than 90 percent dependent on energy imports and Russia provides nearly one-third of Europe’s annual natural gas demand. Denying direct access to our resources keeps these countries vulnerable to supply shocks from natural disasters, politically driven agendas and unforeseen conflicts. We operate in a global economy, and must overcome the traditional notions of isolationism and invest in the system we have promoted.
The study also makes an interesting point concerning America’s credibility as a promoter of free trade. The ban on crude oil exports and non-FTA authorization delays could be seen as illegal conduct under World Trade Organization (WTO) rules that invites other nations to question the validity of our trade policy. As a member of the WTO, we have obligations as an international member of the global marketplace. WTO rules apply to trading in natural gas in the same way they apply to any other product.
Finally, as former Defense Secretary William Cohen recently wrote in an op-ed for Time, “The core of our strength overseas is economic strength at home.” Limiting exports of natural gas and crude oil causes an unnecessary drag on the productivity of the energy industry that has played one of the largest roles in lifting us out of economic recession. Exports of oil and natural gas will lead to increased domestic production and increased U.S. economic activity. This means the continued injection of capital investment into the American economy, creating a ripple effect throughout a variety of domestic economic sectors including this industry’s vast supply chain.
The U.S. energy resurgence provides us the opportunity to redraw the world’s geopolitical landscape and the decisions we make today are crucial to realizing long term benefits of a more secure global economy. U.S. energy exports will mitigate disruptions within the global market, support lower prices at home and abroad and contribute to increased energy security. Let’s start on the right path today.