Thorning Commends Senate Committee Decision

Legislation introduced this week by Senator Heidi Heitkamp (D-North Dakota) that would lift the 40-year-old ban on crude oil exports was approved by the Senate Banking, Housing, and Urban Affairs Committee.   Lawmakers and industry experts alike viewed the bill’s passage as another positive step towards bettering America’s economy and strengthening our national security.

Dr. Margo Thorning, senior vice president and chief economist with the American Council of Capital Formation (ACCF), released a statement yesterday applauding the committee’s decision and the effort put forth by both parties:

“Today’s vote by the Senate Committee on Banking, Housing, and Urban Affairs on the, ‘American Crude Oil Export Equality Act,’ takes us one step closer to breaking America’s energy sector free from the shackling effects of the now-misguided ban on crude oil exports. Each day that passes under this limiting policy is another day lost in capitalizing on our burgeoning domestic energy capabilities and positioning America as a stronger and more forward-thinking international leader. Attempts to modernize our energy policy by eliminating the ban is neither a Democratic or Republican issue—it’s an American issue. And thankfully, lawmakers on both sides of the aisle are demonstrating this reality by working together to ensure that America’s vast energy potential doesn’t get lost in the midst of partisan bureaucracy.”

Passing this measure underscores the bipartisan support for relinquishing an outdated energy policy in favor of one that ensures a greater economic future for America.

CBO Agrees – The U.S. Economy Would Benefit from Crude Oil Exports

This week, the nonpartisan Congressional Budget Office (CBO) published a report  analyzing the economic effects on the American economy of legislation that would remove the ban on crude oil exports.  H.R. 702, authored by Representative Joe Barton (R-Texas), is currently scheduled for a vote in the House next week.

The CBO cost estimate concluded that the ban has cost American producers $1 trillion in lost profits over four decades. It also said, “Enacting this legislation would reduce net direct spending by $1.4 billion over the 2016-2025 period by increasing offsetting receipts from federal oil and gas leases.” This report, conducted by a federal nonpartisan research office, continues to reiterate the positive impacts lifting the ban would have on our economy while also increasing revenue for the government.

A previous report released earlier this summer by the Energy Information Administration also discussed the bearings crude oil exports would have on our economy and determined that the price of petroleum products, including gasoline, would either remain the same or decrease. Once more, these findings show that as a result of exporting crude oil, our international oil supply will increase, which will put downward pressure on domestic gasoline prices.

Both government studies provide unbiased information that supports economic arguments to lift the ban on crude oil exports and underscore the need to finally change our outdated energy policy.

Heitkamp vs. Franken: Why Heitkamp’s Argument Stands the Test of Modern Time

On Sunday, September 20th, Senator Heidi Heitkamp (D- N.D.) published an op-ed in the Grand Forks Herald making the case for Congress to lift the ban on crude oil exports. Running opposite her thoughtful commentary, Senators Al Franken (D- Minn.) and Ed Markey (D- Mass.) wrote an article arguing to keep the ban in place. Sens. Franken and Markey, however, failed to provide a thorough case for keeping in place an obsolete policy, which was established during a different time in our history, and, if not changed, could ultimately derail the nation’s position as a global energy leader.

Sens. Markey and Franken argue that lifting the ban on crude oil would negatively impact energy prices and businesses in the United States. In contrast, Sen. Heitkamp points out a fact that many experts have agreed upon over the last year, that the ban is an unnecessary restriction on one of America’s most abundant and coveted resources. “Lifting the ban on oil exports will lower or leave gasoline prices unchanged and increase production—creating more American jobs and boosting our economy,” Heitkamp said. Her conclusion is supported by a plethora of studies and public policy institutions over the last year. For example, an analysis conducted by ICF International and EnSYS Energy, concluded that lifting the crude oil exports ban would result in upwards of $70 billion in fresh capital invested domestically in energy exploration, development, and production. Not to mention that lifting the ban would add $20 billion to U.S. gross domestic product (GDP) by 2020 along with another 300,000 new jobs.

One of the biggest myths perpetuated by opponents of riding the U.S. of another outdated, ineffective policy is the idea that allowing crude oil exports would harm consumers at the gas pump. A recent study by the Administration’s own Energy Information Administration (EIA) debunked that idea, saying, “Petroleum product prices in the United States, including gasoline prices, are either unchanged or slightly reduced without crude oil export restrictions.”

Finally, Sen. Heitkamp thoroughly covered the national security implications of ending the ban. Not only would we ensure our nation’s safety, she says, but we can “gain ground on our foreign competitors.” How is this possible if, as Sens. Markey and Franken argue, lifting the ban would harm national security since we still import roughly five million barrels of oil per day? What the senators fail to mention is that 40 percent of foreign imports come from Canada, a friendly ally. And they gloss over the fact that many of our allies – Japan and South Korea, to name two – are almost completely reliant on energy imports and, due to our misguided polices, work with unstable regimes. Providing our allies with a stable source of oil not only helps solidify ties with strategic allies, but it would also encourage significant economic growth at home.

Democratic Sen. Heitkamp is part of a growing bipartisan movement in both chambers of Congress working to ensure that a policy which has little bearing on today’s economic market place is replaced with a common-sense solution that protects U.S. energy security and strengthens strategic international partnerships while giving the domestic economy a much needed boost.

Leading Experts Discuss the Benefits of Energy Exports for Minority Communities

On Friday, the American Council for Capital Formation and the National Association of Neighborhoods hosted a panel discussion on how domestic energy production has impacted communities of color at the Congressional Black Caucus Foundation’s Annual Legislative Conference in Washington. The panel featured a variety of experts who all agreed that continued growth in the energy sector, in particular by increasing energy exports, is key to bringing economic gains to minority communities.

Ricardo Byrd, executive director of the National Association of Neighborhoods, led the discussion as moderator with a series of questions on America’s “energy renaissance” and how it affects “our poorest rural and urban neighborhoods.” Dr. Margo Thorning, ACCF’s Senior Vice President and Chief Economist, focused on the macroeconomic benefits communities around the country would receive if the ban on crude oil exports is lifted.

“The United States continues to sit on the global sidelines by refusing to adopt a 21st century energy policy that takes full advantage of our energy resources,” said Dr. Thorning. “And those abundant resources, unimaginable forty years ago, now put us in the position to become a powerful player on the world’s energy stage.  The significant economic benefits that would result – increased economic growth, more jobs for Americans and downward pressure on gas prices – are undeniable. Today’s discussion makes clear that it is finally time for the United States to embrace an energy policy that reflects the reality of our energy present, not the ghosts of our energy past.”

Paula Jackson, President and CEO of the American Association of Blacks in Energy, also participated on the panel and worked to dispel the claim that lifting the ban would only benefit big oil companies. She said allowing crude oil exports would be a boost to employees and help the economy grow. “Companies that don’t make money don’t survive. Those employees and those communities suffer,” Ms. Jackson said.

Inside Sources covered the discussion and published an article which quoted Ms. Jackson’s insightful comments on the benefits of energy exports for minority communities.

Bill Dickens, Senior Utilities Economists for Tacoma Power also discussed how the energy community is changing communities of color for the better and the importance of minority outreach when it comes to spreading the word about job opportunities available.

It is clear that supporting crude oil exports is a policy change that will provide job opportunities, especially for minorities. Specifically, an IHS study from March 2014 reports that of the 1.3 million job opportunities available in the oil and natural gas industry between now and 2030, nearly 408,000 – or 32 percent – will be filled by African American and Hispanic workers, with women  accounting for 185,000 jobs.  However, Washington’s foot-dragging on this issue threatens to close the window of opportunity to sustain the booming domestic energy industry that can clearly be a win-win for Americans.

Thorning: House Committee Vote a Step Forward on Path To a Secure Energy Future

Dr. Margo Thorning, Senior Vice President and Chief Economist for the American Council for Capital Formation (ACCF), released the following statement after the House Energy and Commerce Committee passed legislation this morning lifting the ban on U.S. crude oil exports:

“The full House Energy and Commerce Committee vote is another step forward on the path to securing our nation’s energy future.  It’s disappointing that the White House has chosen not to support the House’s actions in the belief that the Commerce Department is the only avenue for lifting the ban on U.S. crude export ban.  The time to act is now.  The world has changed tremendously since the ban on crude oil exports was put in place over forty years ago.  That is nowhere more evident than in the transformation of our nation’s energy landscape from one of scarcity to one of abundance.  By exporting our excess oil into the global energy market, we will bring significant economic benefits to the nation and American consumers.  The energy renaissance has afforded us an unprecedented opportunity and I would encourage both the White House and the Senate to follow the House’s lead so we do not let that opportunity slip through our fingers.”

Lawmakers on Both Sides of the Aisle Agree: Crude Oil Exports Yield a Positive Economic Impact

The ongoing deliberations in Congress over the proposed Iran nuclear deal have once again turned the discussion towards efforts in our nation’s capital to lift the 40-year-old ban on exporting U.S. crude oil. To explore the building momentum around the issue, the National Journal hosted a forum with the American Petroleum Institute (API) consisting of elected officials from both parties along with industry experts, all of whom weighed in on the economic and geopolitical impact of lifting the 1970’s ban.

Senator Heidi Heitkamp (D-North Dakota) was one of the event’s keynote speakers in which she spoke in favor of lifting the export ban, emphasizing an increase in American jobs and overall global supply as well as a positive result for consumerism. “Fundamentally, commodities have to find their market. If we are going to be successful in America, if we are going to be successful tapping into a global economy where 95 percent of potential consumers live outside the United States of America, we cannot irrationally restrict exports of anything. There is absolutely no logic to not lifting this ban,” Senator Heitkamp told the crowd.

Senator Heitkamp’s fellow North Dakotan, Republican Senator John Hoeven, was also a keynote speaker at the event echoing Senator Heitkamp comments and also stressing the national security benefits that would come as a result of lifting the ban. Senator Hoeven highlighted how the perils of our allies continuing to be dependent on other nations’ supply of crude oil, specifically mentioning OPEC, Russia, and Venezuela, stating, “In order for America to become energy secure we need to make the right policy changes so we can grow our industry.”

The House Energy and Commerce Committee is scheduled to vote on eliminating the ban this Thursday and now the Wall Street Journal  is reporting that the full U.S. House of Representatives plans to vote on crude oil exports, possibly before the end of the month.

It is important that the U.S. reaps the full benefits of our abundant supply of energy by allowing crude oil exports. Doing so will lead to an increase in jobs, overall sense of energy security, and overall benefit American consumerism. Looking ahead, all eyes will be on the House, then the Senate, to ensure this opportunity becomes a reality and does not go to waste. Now is the time to take action and for our elected leaders in Washington to lift the ban on U.S. crude oil exports.

Bill to Lift Ban on Crude Oil Exports Advances in House Subcommittee; Next Stop is Full Committee Vote

The 40-year-old policy prohibiting the export of American crude oil is one step closer to being repealed after the House Energy and Commerce Subcommittee on Energy and Power voted to lift the ban last week. Crude oil exports will bring wide-ranging economic benefits to the United States including more American jobs, improvement in energy security, and a chance to become a global energy player, rather than continuing to sit on the sidelines. The legislation now moves on to a full markup in the House Energy & Commerce Committee before a vote.

Follow the links below to read more about the Subcommittee’s decision:

Thorning: Crude Exports Will Yield Healthier Economy for Americans

Dr. Margo Thorning, Senior Vice President and Chief Economist for the American Council for Capital Formation (ACCF), released the following statement after the House Subcommittee on Energy and Power voted this morning to lift the ban on U.S. crude oil exports. She states:

“This morning’s House subcommittee vote brings the United States one step closer to achieving a more practical and competitive energy policy. It is well established that utilizing our energy resources by eliminating the outdated ban on crude oil exports will yield a healthier economy for consumers—including added jobs and higher GDP – without raising the price of gasoline. I would urge the full House and the Senate to follow the path today’s vote sets us on by passing legislation to lift the ban. After forty years, it is time to change our energy thinking and shed these outdated policies.”

CAP Report Falls Short On Crude Oil Export Facts

Margo Thorning, Ph.D., Senior Vice President and Chief Economist, American Council for Capital Formation

As a congressional vote on removing federal restrictions on U.S. crude oil exports is expected to be held in the upcoming months, support for this policy change continues to gain momentum with lawmakers on Capitol Hill.

However, recently the Center for American Progress (CAP) published a column that distorts the well-established facts about the benefits of utilizing the United States’ energy resources, specifically crude oil. The CAP brief, which concludes that repealing the ban on crude oil exports would ultimately harm U.S. energy security and environmental interests, contains unsubstantiated claims that blatantly disregard energy market realities and sound economic logic.

One of CAP’s initial claims is that there are uncertain consumer impacts with allowing crude exports. They attempt to bolster their claim by arguing that with the analyses conducted to date there is a lack of “precise, independent, and credible estimates of the market and production effects.” This clearly ignores the insights from our own government agencies and influential public policy institutes. Just this week, the U.S. Energy Information Administration (EIA) released its latest analysis on the crude oil export ban and its effects on consumers and the domestic marketplace. The report notes specifically that “petroleum product prices in the United States, including gasoline prices, would be either unchanged or slightly reduced by the removal of current restrictions on crude oil exports.”

Additionally, the Government Accountability Office (GAO) and the Congressional Budget Office (CBO), also supported the point that U.S. crude exports would add overall supply to the global market, putting downward pressure on crude oil as well as gasoline prices and clearly benefiting consumers. Numerous analyses by think tanks and economic consulting firms have also come to the same conclusion.

CAP also alleges that “the U.S. refinery sector is capable of absorbing any new supply, making it unnecessary to lift export restrictions.” However, according to the EIA, new crude oil production means there is opportunity for both the domestic refining sector and exportation of crude. In EIA’s May 2015 analysis on the implications of increasing production and U.S. refining, they found that even under a high production and unrestricted exports scenario, the domestic refinery sector will still grow. Crude runs and domestic processing capacity will still increase as $2.3 billion is invested to build 0.8 million barrels per day of new stabilizer and splitter capacity (See Table 3 of the EIA report). It also found that U.S. refineries will maintain their competitive advantage even if the U.S. is allowed to export crude oil reserves. In fact, the EIA states, “With or without current crude oil export restrictions, domestic refiners are also expected to maintain a significant advantage compared to offshore refiners given the continued projected availability of low-cost domestic natural gas, which is used as both a fuel and feedstock by refiners.”

Exporting crude oil will increase overall domestic production and in turn increase rates of domestic job growth while adding significant value to the American economy. A recent IHS study demonstrates how this will ultimately create between 394,000 and 859,000 new jobs annually nationwide through the supply chain.

The CAP report also claims that enabling crude oil exports will lead to an increase in overall land-loss as a result of potential expansion of drilling activity. However, one of the most distinguished accomplishments of energy industry to date has been its continued ability to reduce the amount of land required for oil and gas development using new innovative technologies. In its analysis however, CAP uses outdated land use data to reach its conclusion, resulting in an inaccurate representation of industry activity and a forecast far greater than reality. The data from 2000 – 2012, half of which was in the early years of directional drilling and hydraulic fracturing, no longer applies and does not include new well drilling efficiencies, land remediation standards and serious reductions in land use. In addition, the number of rigs active in the main U.S. tight oil producing regions is down 58% over the last 12 months but production levels are continuing to climb.

CAP also argues that that lifting the ban on crude oil exports could lead to an increase in greenhouse gas emissions. They quote EPA data that “the combustion of a barrel of crude oil results in approximately 0.43 metric tons of carbon pollution. If U.S. production increases by an average of 3.3 million barrels per day between 2015 and 2035—the high range from the NERA report and the highest estimate in the reports CAP reviewed—then the combustion of those resources will result in more than 515 million metric tons of carbon pollution per year.” However, CAP admits that “it is unclear the extent to which more exports of U.S. crude will encourage additional oil consumption and, therefore, add new carbon pollution to the atmosphere” rendering their statistics and claims questionable. In fact, U.S. exports of crude oil are likely to replace exports from countries with weaker environmental controls than we have, thus tending to reduce the growth of emissions globally.

Finally, CAP lists a number of unsubstantiated claims regarding the production and transportation of energy as a result of permitting crude exports, including that the oil extracted as a result of an increase in production would go straight to rail cars. This statement is simply untrue. In 2014, only 4% of domestic crude oil was transported by rail with the majority being moved daily by highly-regulated underground pipelines.

In closing, the report states that the “economic, national security, and environmental impacts of changing long-standing U.S. crude oil policy are neither well-documented nor well-understood,” which cannot be further from the truth. From a national security standpoint, exporting our crude oil to other nations will actually increase U.S. influence. By allowing U.S. energy exports, we can step up as a global energy leader to better support and protect our allies while at the same time strengthening our own economic and national security.

As previously mentioned, multiple economic studies – from the government and the private sector – have been conducted over the last year that have “well-documented” the impacts of crude oil exports. And they are quite clearly “well-understood.” In the past year alone, over thirty editorial boards from publications all over the nation, including the Washington Post, The Oklahoman, and Denver Post, have chimed in on the economic and strategic importance of lifting the ban. And significantly, a number of elected officials from both sides of the aisle including House Speaker John Boehner (R – OH) and Senator Heidi Heitkamp (D-ND) have all come out encouraging crude oil exports, adding to the momentum on this important policy. In order to ensure the U.S. does not miss out on this tremendous economic opportunity, it is critical that our leaders – armed with the facts – take the right steps to ensure that the ban on crude oil exports is lifted.

In Case You Missed It: This Summer in Crude Oil Exports

With the Labor Day weekend signaling the end of summer and the beginning of the second half of our legislative session, we have a chance to reflect on the significant developments in the debate over  lifting the 40 year old ban on U.S. crude oil exports. Two headlines stood out this summer:

Editorial Boards Overwhelmingly Voiced Their Support For Crude Oil Exports

This summer, numerous editorial boards from coast to coast weighed in on the importance of lifting self-imposed sanctions on crude oil exports. Increased energy production, domestic job growth, and a strengthened sense of national security were among the reasons listed as to why we need to eliminate the outdated ban on crude.

The Washington Post   “Imagine there were a simple policy that would spur economic growth, lower gas prices and please international allies. This policy exists: removing the United States’ irrational and outdated ban on exporting domestically produced crude oil.” August 2, 2015

The Denver Post – “The president has the power to lift the ban on his own. Congress could do it, too. If they did, they’d be creating jobs and aiding consumers with a single stroke.” April 15, 2015

The Detroit News – “The boon the U.S. economy would experience from an open export policy is obvious. Increased investment, fuel savings for consumers and an uptick in production would boost the GDP by more than $38 billion in the next five years, while lowering the country’s trade deficit by $22 billion.” August 4, 2015 

The Wall Street Journal – “The ban is a relic from the Nixon era when oil prices spiked and OPEC began. America’s unconventional oil boom has changed everything.” July 29, 2015

Democrats Warmed Up To Crude Oil Exports

The summer months have seen growing consensus from both Republicans and, surprisingly, Democrats on Capitol Hill about the need to address the antiquated ban. As with any significant policy change, improving America’s chances of achieving energy security through crude oil exports, will require compromise from leaders of both parties. Here are comments from several of those Democrats on the possibility of allowing crude oil exports.

Senator Michael Bennet (D – CO): “In the context of being able to move us to a more secure energy environment in the United States (and) a cleaner energy environment in the United States, yes,” – Houston Chronicle

Senate Minority Leader Harry Reid (D – NV): “We should sit down and work something out with those who are so focused on exporting it and those who are focused on not exporting it and come up with a deal.” – Bloomberg

Senator Robert Menendez (D – NJ): “The US should consider licensing the strategic export of American oil to allied countries struggling with supply because Iranian oil remains off the market.”  – Platts

Representative Henry Cuellar (D – TX): “I will continue to advocate for a full repeal of our country’s outdated crude oil export ban for the benefit of Texas as a world leader in energy production and exploration.” – The Monitor

Looking Ahead: The Prospect of Crude Oil Exports Looks Bright

With Congress back in Washington this week after a long August recess, it is absolutely critical that they continue the momentum this issue has created and resume working towards a bipartisan proposal to update our current energy policy. Amy Harder, a reporter for the Wall Street Journal, weighed in, praising the collective bipartisan effort pushing for crude exports to date. She recently wrote, “Exporting oil was unthinkable to most energy industry experts until the last couple of years, and support on Capitol Hill has been growing more quickly this year than many would have thought given the bipartisan concern about how exporting oil could, or could be perceived to, raise gas prices—a politically fraught election issue.”

The House could hold a vote as soon as this month. Armed with the facts on the significant economic and geopolitical benefits of lifting the crude export ban, it’s now time for Congress to relinquish our energy past and embrace our energy future.

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