Whether Gas Prices Are High or Low, Lift the Ban on Crude Exports
Nicolas Loris / Thomas Lee /
Gasoline prices continue to drop across the country with the national average falling to $2.50 per gallon.
Are low prices good or bad for the prospects for lifting the ban to export crude oil? The reality is it shouldn’t matter because energy free trade will benefit the United States in both the near term and the long run. That’s why Congress should lift the ban regardless.
One of the primary concerns among skeptics of lifting the crude export ban is the effect that increased oil exports might have on domestic gas prices.
Several studies have projected that lifting the ban would actually decrease gas prices both in the United States and globally. Because oil is a globally traded commodity and refiners are equipped to handle different qualities of crude oil, an open market for shipping crude would better match global refining capabilities. Despite the fact that all signs point to lower fuel prices in the U.S., the skepticism remains.
The federal ban on exporting crude oil has been in place since the 1970s to fight potential fuel shortages caused by the Organization of Arab Petroleum Exporting Countries (OAPEC) oil embargo. Rep. Joe Barton, R–Texas, recently introduced a bill to lift the still-in-place ban on crude oil exports.
“The U.S. has long been committed to free trade and open markets,” said Barton, who heads a Republican energy policy task force. “It’s time we practice what we preach when it comes to energy.”
Barton had stated earlier that bipartisan legislation to lift the ban could move quickly through the new Congress. He predicted that the ban will “eventually be lifted for the same reasons Congress eventually overturned other failed government efforts to regulate energy price and supply.”
Barton’s point is an important one.
Congress’ goal shouldn’t be to keep prices low but to permit markets to work freely. As appealing as capping gasoline at a dollar per gallon sounds, the unintended consequences would be devastating. In fact, Americans experienced this in the 1970’s when government-imposed price ceilings resulted in frustratingly long lines, empty gas stations, and favoritism where friends and the politically connected had access to gas supplies but regular customers did not.
Having free-energy markets means that resources go to their most efficient use. And as with all other goods traded around the world, both parties will stand to benefit. George Baker, executive director of the Producers for American Crude Oil Exports, expands upon the benefits the U.S. would see:
Repealing the ban will unleash domestic energy producers to compete in the global oil market, while paving the way for more jobs, investment, innovation, and growth for American workers and consumers. It can also strengthen our national security and enhance our geopolitical standing in the world.
By increasing supply diversity through free markets, energy free trade will reduce the effects of supply shocks and increase the energy available for national security needs. Additionally, removing restrictions on crude oil exports would improve geopolitics around the world by reducing any one nation’s ability to manipulate energy supplies for political and economic influence.
The economic and geopolitical benefits are clear. The crude export ban is an antiquated, politically motivated law that needs to go.