This week, Houston will host an important discussion focused on an integral issue within our country’s energy landscape: crude oil exports. Notably, we live in an age where positioning the United States as the global leader in meeting and supplying energy demands has not only become a priority; but almost a reality. What many Americans may be surprised to find is that it is our own government’s outdated policies keeping this development just out of reach.
America’s burgeoning energy sector is a shining beacon of what we are capable of when American innovation meets determination. We have passed our competitors across the globe to become the world’s largest producer of oil and natural gas, already producing nearly 75 million barrels of crude oil this year alone.
However, while the U.S. is currently producing crude oil at record rates, low oil prices coupled with an excess domestic supply has created a glut that threatens to bring our energy transformation to a halt. In fact, we are already seeing ramifications; with crude oil production from U.S. shale forecasted to drop in December.
The reality is that the U.S. is the only major oil and natural gas producing country in the world not transferring excess supplies into the global market. Due to antiquated energy policy from the Nixon era, the U.S. remains unable to export crude oil and take full advantage of its current situation. Even more troubling, while our government is sidelining our ability to rise as the global supplier of crude oil, it recently moved forward with a highly-scrutinized nuclear deal allowing Iran—a politically unstable and volatile nation—the ability to export its own crude oil.
What are we missing here? Allies across the globe dependent on crude oil imports, including Japan and Taiwan, would benefit significantly more—and would prefer— receiving their supplies from the U.S. over volatile nations like Iran and Russia. In addition, a new policy brief from the American Council for Capital Formation concluded that allowing crude oil exports could provide an opportunity for the U.S. to strengthen the global energy market, easing current tensions with China and providing political and economic stability to the Asia Pacific – an area of great geopolitical concern. It goes without rhyme or reason that our nation—a forward-thinking global security leader—should keep intact policy that directly combats our foreign policy efforts.
Along with strengthening energy and national security abroad, the economic benefits here at home would be no less impressive. Analysis estimates that crude oil exports would create as many as 1.3 million direct and indirect supply chain jobs, with 400,000 of those opportunities going directly to minority communities including Hispanics and African-Americans.
Federal and local tax revenues would reach as much as $13.5 billion, alongside $38 billion in added GDP by 2020 according to one ICF International report. Notably, the same report also confirmed nearly $70 billion in additional capital that could be put towards energy production, exploration, and investments.
Too much crude oil with nowhere to go does not bode well for our nation’s bottom-line. Domestic energy producers, faced with limited storage options and diminished market return from domestic refinery limits, have begun slowing the wheels of development. According to a report by a downsizing firm Challenger, Gary, & Christmas, over 13,000 jobs, or more than a quarter of the overall energy industry job losses, were attributable to the persistently low price of oil. Crude oil exports are the key to giving energy industry producers the market certainty they need to continue to invest and bring jobs back to the table.
Thankfully, a growing number of lawmakers on Capitol Hill recognize the critical nature of crude oil exports, culminating last month in bipartisan legislation that passed the U.S. House in a 261-159 vote. As impressive as this is, the issue is not yet resolved. If we are to harness America’s energy capabilities and secure our position as a global energy leader, policy must be adopted that reflects our current energy renaissance. And to do this, we must repeal America’s self-inflicted ban on crude oil exports.