Due to advances in technology, American companies have found ways to extract oil that was previously too expensive. Due to these advances, it is predicted that the United States could become the world’s number one producer of oil by the year 2015. However there is something holding back the US’s energy dominance, and that is an outdated law from a time when America was dependent on foreign oil and was desperately trying to conserve it. This is no longer the case. In order to encourage economic growth, employment, and stability the United States should reverse its policy on exporting petroleum.
There are three main reasons to remove the ban on exporting petroleum. First, oil exports would increase net exports, raising the country’s GDP. It translates into more of the money Americans (and the world) spend on gas coming to the US. Second, the expansion in capacity would create jobs. The most significant effects may be those on the price of oil.
There are two effects that lifting the ban could have. One of those effects is to stabilize the price of oil. The extraction shale oil on the United States oil imports has been evaluated in a recent report released by Fitch Ratings, reported by MarketWatch, as having a stabilizing effect on prices. As stated in the report (taken from here):
“…all oil-consuming countries benefit from the stabilizing effect of increased U.S. output on world oil prices. This is the benefit of energy interdependence — the linkage of U.S. and world oil markets through reduced imports of crude and increased exports of products.”
This effect would only get stronger if the ban on exports is lifted. It should be noted that the price most likely wouldn’t decrease significantly as a price of about $85-$90 a barrel is needed in order to make shale oil projects viable. Price stability is still a welcome benefit for consumers.
There are those that are for keeping the ban in place however. They believe that exporting oil harms America’s chance at energy independence, arguing that every barrel we export would have to some how have to be made up in imports. This is not accurate, and it can be argued that exporting the oil is better then refining it ourselves since our refineries are not set up for the type of oil, and it would be better for our environment to have it refined else where. The end result is still the same: money flowing into America. Who could be opposed to that?
The attacks on lifting the ban come from the refiners who currently make all the money from exporting the heavy oil that we have been importing. While exporting petroleum is illegal, there is no such ban on the refined products. Exporting oil cuts them out of the shale oil profits, but these are profits that they aren’t even prepared to take, since they aren’t set up to refine it anyway. That is not a sufficient reason to continue to ban exports when America needs growth now. The United States should lift the antiquated ban on oil exports in order to grow the economy and provide price stability to consumers and the world.