What kind of world do we live in, where America’s leaders try to give Iran better international trading terms than we provide our own petroleum producers?
We are poised to lift economic sanctions and allow an enemy whose leaders chant “Death for America” to enrich its economy by exporting oil — it’s only valuable natural resource.
At the same time, we maintain a 40-year-old ban on exporting our own domestic crude oil, to the detriment of our oil industry and economy.
This is backwards, and the irony would be laughable if it weren’t so sad.
It is high time the United States ended a perverse and harmful manipulation of the free crude-oil market and lifted the outdated export ban on oil.
The president is using immense political capital to extend this very courtesy to an enemy like Iran. It makes no sense.
The ban was enacted in 1975 as an attempt by Congress to “do something” about price spikes created by the OPEC oil embargoes. In truth, the ban has done very little except bottleneck oil development in the past few years. Under the current law, domestic drillers have to sell their oil to domestic refineries, which are then free to sell their refined products all over the world. If the goal was to keep our oil here, we should ban selling refined products globally, but this would be calling the bluff, to the detriment of everyone.
By keeping our oil here, we’ve just guaranteed the refining industry discounted domestic crude oil.
The past decade’s shale revolution has led to a manufacturing resurgence and major growth in the American petroleum industry. However, the restriction on global trade has limited the oil industry’s ability to continue expanding, adding more jobs and making more investments in the American economy.
The United States has a limited refinery capacity, and domestic producers can only sell their oil to domestic refineries. When domestic production starts to outpace refinery capacity, producers have to slow down — therefore eliminating jobs, cutting back on activity, or shutting down operations. This means limited growth and stunted job-creation.
Lifting the ban on crude oil exports would eliminate this harmful market manipulation. Domestic producers would no longer have an artificial production ceiling, enabling them to expand their business activity and job growth to match true global demand.
Counter-intuitively, lifting the ban on crude oil exports could reduce consumer fuel costs by up to $5.8 billion. Greater global supply of crude oil would reduce fuel prices because the domestic price of gasoline is set by the world market, and the higher the global supply, the lower the prices.
Lifting the outdated ban would also reduce the trade deficit, support the creation of hundreds of thousands of domestic jobs, and grow the American economy by billions of dollars.
Opponents may be worried about selling our oil to the world, but our capacity to locate and drill new oil reserves is increasing every day. We have far more known reserves than we did 10 years ago, let alone 40 years ago, when the ban was enacted.
Investment in domestic infrastructure now would mean our country would have a greater capacity to be energy independent during a global crisis or war.
Market manipulations and trade restrictions are counter to the American way of doing business. The current ban on exporting crude oil is hurting our economy and restricting our allies’ options if they want to get their oil from friendly exporters like the U.S.
Why should Iran get a better deal than us?
Let’s lift the ban and let our allies do business with us instead of our enemies.