Allowing export of U.S. crude oil would help keep prices low and create growth in domestic oil industry !!
2/25/15Reuters — Over the past few weeks a silent (and perhaps sometimes audible) cheer has risen in the most unlikely of places — gas stations around the country, as Americans have gleefully filled their cars at almost half the recent cost.
It wasn’t too many weeks ago that the U.S. was in an energy renaissance, primarily by innovations in hydraulic fracturing and horizontal drilling, domestic oil production topped the high since 1988 of 8 million barrels a day.
“If we want both low prices at the gas pump and continued growth in the domestic oil and gas industry, the U.S. should allow the export of crude oil and let the free-market system work.” -Derek Miller
Despite the current economic dynamics, however, the choice between either low gas prices or a robust oil production economy in the U.S. is a false one. There is one thing that would help stabilize the energy production economy in both the short-term and provide stability to the boom and bust cycle in the long-term, and that is allowing U.S. companies to export crude oil.
The current ban on crude oil exports has its roots in the energy crisis of the 1970s. In 1973, an oil embargo led to fuel shortages and sky rocketing prices for Americans.
A direct response to this energy crisis was the Energy Conservation Act of 1975, which banned U.S. oil exports in an effort to establish a reserve of petroleum. While it is a truism that government policy lags innovation in business and advances in the economy, basing current energy economics on the geopolitics of four decades ago is silly.
This silliness is even starker given that the government prohibits crude oil exports but allows refined oil products, such as gasoline, to be exported and even considers crude oil with a certain density as “refined.”
Most importantly, when oil is exported, free markets work the way they are designed. Removing the prohibition on exporting crude oil will lead to increased domestic oil production, greater energy independence, job creation and economic growth. In fact, the American