The Numbers Don’t Lie: Economists Call for Crude Oil Exports

The economic case for allowing U.S. crude oil exports is convincingly set out in a new paper released today by Dr. Margo Thorning, senior vice president and chief economist of the American Council for Capital Formation, and Dr. William F. Shughart II, research director and senior fellow of the Independent Institute, J. Fish Smith Professor in Public Choice at Utah State University’s Huntsman School of Business, and Strata fellow.  After a thorough review of five highly respected, rigorously sourced macroeconomic studies, Drs. Thorning and Shughart lay out the significant domestic economic benefits as well as the geopolitical impact for our nation should Congress and the Obama Administration eliminate the outdated ban on the export of U.S. crude oil.

“Our nation’s energy landscape has gone from one of scarcity to one of abundance and it’s time for our policies to start capitalizing on that reality,” Dr. Thorning said.  “The United States is in the midst of an unprecedented energy boon which few experts predicted. The decades-old rationale for crude export restrictions no longer applies. The economic and national security benefits that will come from exporting our crude oil resources can only be realized in new policies that embrace this era of energy abundance.”

Professor Shughart added, “These studies are conclusive that lifting the crude oil export ban will grow our economy and create jobs. Additionally it would provide a number of geopolitical benefits including strengthened relationships with our global trading partners while demonstrating our commitment to free trade. We risk those relationships – and our own credibility – by continuing to restrict the export of crude oil.”

The paper examines multiple macroeconomic studies, the most recent of which was released by IHS last month. IHS estimated that lifting the export ban would create as many as 859,000 jobs and increase GDP as much as $170 million by the year 2030.The reports all reach the same unanimous conclusion: lifting the crude oil export ban will create jobs, boost domestic investment and Gross Domestic Product (GDP), narrow our international trade deficit, and put downward pressure on fuel prices. The paper also touches on the significant political and diplomatic benefits to the nation should the crude oil export restrictions be removed.

“While many countries use their energy resources to exert strength, we can export ours to promote peace while enjoying the domestic benefits of economic growth and job creation,” said Dr. Thorning. “We have been absent from the global energy stage for too long and now is the time for lawmakers to take action so that the United States can take on a leading role.”

For a link to the paper, click here.


In Case You Missed It (May 22nd – May 29th)

Memorial Day weekend can be pretty hectic. To get you up to speed on the latest news articles and op-eds, here are some of the notable highlights from the crude oil exports conversation from the past week. On Thursday, former Secretary of Defense, William S. Cohen, authored an op-ed in TIME magazine, weighing in on the benefits of allowing the U.S. to become a major supplier of energy to our allies in the global energy market. “Increased energy trade with our Asian partners would add substance to the U.S. rebalance to Asia, serving to bolster the region’s energy security and promote the continued economic vitality of allies such as Japan and South Korea, while also offering new areas for possible collaboration with China, India, and ASEAN members,” Cohen wrote.

Additionally, The National Association of Manufacturers (NAM) President and CEO Jay Timmons also discussed the legal implications of restricting exports arguing that the U.S. could be in danger of violating World Trade Organization trade policies if we continue to withhold crude oil from the global market. “The outdated legislation that bans crude oil exports is at odds with America’s export-friendly trade policy and goals, and limits Houston’s economy. It is also at odds with our international commitments and needs in a global economy,” Timmons wrote in the op-ed  that was published in the Houston Chronicle and Seattle Times.

This week’s other notable op-eds/articles:

  • Bloomberg, 05/29/2015, “BofA Sees 50% Chance U.S. Ends Crude-Export Ban by 2017,”  by Rupert Rowling
  • Reuters, 05/28/2015, “Lifting of U.S. crude oil export ban possible within year –analysts”
  • The Hill, 05/28/2015, “End the ban on oil exports,” by Merrill Matthews
  • Washington Times, 05/27/2015, “Obama must end crude oil export ban, Clinton defense secretary William Cohen says,” by Ben Wolfgang
  • Charleston Daily Mail, 05/27/2015, “Editorial: Congress needs to allow crude oil exports,” by Editorial Board
  • Breaking Energy, 05/26/2015, “U.S. Energy – It’s All About Supply,” by Energy Tomorrow Blog
  • Oil Price, 05/25/2015, “E.U. Could Provide Push U.S. Needs To Lift Energy Export Limits,” by Alexis Arthur

From Our Blog This Week:

Stay Tuned…

  • 06/04/2015 – Hearing on Energy Accountability and Reform Legislation

Be sure to click HERE and check us out on Twitter by following us at @UnlockCrude so you can stay current by receiving daily updates about the most important news and discussions surrounding the crude oil exports conversation.


We Aren’t In the 1970’s Anymore: Time To Allow Energy Exports

This week The Charleston Daily Mail weighed in on the debate of crude oil exports publishing an editorial urging Congress to acknowledge the significant changes that have occurred over the last 40 years, and end the ban on crude oil exports. While the U.S. is currently in the midst of an energy renaissance, people around the country are starting to realize the truth: that an antiquated energy exports policy is prohibiting the U.S. from capitalizing on a tremendous economic growth opportunity.

“With one action, the U.S. Congress could reduce the nation’s trade deficit, grow U.S. jobs, increase revenue and assure more U.S. influence across the world,” the editorial board states. The Charleston Daily Mail become the latest publication to join the growing consensus in favor of lifting the ban to ensure an economically prosperous and energy secure America.

For example, the Denver Post expressed similar sentiments in an editorial piece they published just last month. “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,” they wrote. In other words, our elected officials possess the ability to let the U.S. to reap the much needed economic benefits of the shale revolution. The time to act is now.

Widely recognized publications from across the country such as The Wall Street Journal, Chicago Tribune, San Antonio Express-News, Washington Times, and Chicago Tribune have all published commentary emphasizing the that a change in policies will benefit the larger economy.

Earlier this year, IHS released a study making this exact point. The study found that benefits to lifting the ban went well beyond large oil companies and bolstered job growth all across the nation, even in non-traditional oil producing regions. They state that “every new oil production job creates three jobs in the supply chain and another six jobs in the broader economy.”

The signs are growing. The U.S. is starting to see the benefits lifting export restrictions on crude oil will have on every day Americans. The U.S. must get with the times, and implement measures that will abolish its restrictive policy on crude oil exports.


Timmons: Ending the export ban would strengthen our economy

The United States, traditionally seen as a promoter of free trade, stands to miss out on an untapped economic opportunity and violate its own trade policies if it continues to restrict the exportation of U.S. crude oil, manufacturers warned this week.

In a piece published in the Houston Chronicle, The National Association of Manufacturers (NAM) President and CEO Jay Timmons discussed how the U.S. is in danger of violating World Trade Organization (WTO) policies if it restricts exports of crude oil to energy-hungry countries and in turn, hinder our own economy.

“The outdated legislation that bans crude oil exports is at odds with America’s export-friendly trade policy and goals, and limits Houston’s economy. It is also at odds with our international commitments and needs in a global economy,” Timmons wrote a piece that also appeared in the Seattle Times. “If a manufacturer sees an opportunity to export an air conditioner, a television, a tractor or an airplane, then by all means that manufacturer should – and in almost all cases can – do it. The same logic should apply to crude oil.”

Timmons makes a critical point that U.S. policies of free trade cannot be implemented in a piecemeal fashion depending upon the commodity especially when the situation and supply of that product has changed so much over the last decade. Thanks to the shale revolution, we are now one of the world’s top producers of oil and natural gas. Yet instead of embracing this abundance by engaging in the global marketplace in which our oil is traded, we still hide behind scarcity-driven policies. And at great cost to our economy.

A recent study by IHS found that Main Street America will be the true beneficiary of lifting the ban on crude oil exports. Specifically, they found that the substantial economic benefits of lifting the ban would extend beyond the oil-producing regions throughout an extensive supply chain that includes every state. In fact, “every new oil production job creates three jobs in the supply chain and another six jobs in the broader economy.”

Additionally, as Timmons states, “The U.S. not only operates in a global market, but we helped write that market’s rules.” In the past the U.S. has challenged discriminatory restrictions imposed by other countries. America cannot limit its exports while crying foul on other nations. Ultimately, export restrictions on crude oil could expose the U.S. to legal problems from WTO governments in which we have committed to international standards of free trade.

We have an international and domestic obligation to promote policies of free trade. To benefit our economy and the people here at home, as well as staying committed to our allies that rely on U.S. geopolitical strength. It is now time for Congress to commit to these duties and export U.S. crude oil.


In Case You Missed It: This Week in Crude Oil Exports (May 15th – May 21st)

The American Council for Capital Formation (ACCF) hosted an event on Capitol Hill Wednesday in correlation with the release of a policy brief on the geopolitical and economic impacts of ending the crude oil exports ban. The event included keynote remarks on U.S. energy policy by Sen. John Hoeven (R-ND), followed by a panel of policy experts who collaboratively engaged on how expanding the production of crude oil and natural gas benefits the American economy. “We’ll need the right mix of pipelines, rails, and roads, but it will be a net win for the country and for consumers,” Hoeven said in his opening remarks. Dr. Margo Thorning, ACCF’s senior vice president and chief economist, moderated the discussion while noting how the economic case for ending the ban on crude exports was already evident. Other esteemed panelists included Ray Keating, chief economist for the Small Business & Entrepreneurship Council (SBEC), Matthew Slaughter, the incoming dean of Dartmouth’s Tuck School of Business and a former member of the White House Council of Economic Advisors, Will Marshall, the president of the Progressive Policy Institute (PPI), and Takashi Kume, special advisor to the Japanese Ministry of Economy, Trade and Industry (METI).

Also on Capitol Hill this week, Sen. Joe Manchin (D-WV) become the latest member of Congress to offer his bipartisan support for crude oil exports by co-sponsoring Sens. Murkowski and Heitkamp’s bill released last week that would repeal the crude oil exports ban.

Other articles focused on our allies’ growing desire for the U.S. to pass legislation that will enable them to share its energy with the global market. Leon E. Pannetta and Stephen J. Hadley published an op-ed in the Wall Street Journal, titled “The Oil-Export Ban Harms National Security.” The article discusses how foreign policy debates tend to fixate far too heavily on military power and action, when in reality, “Ignored is a powerful, nonlethal tool: America’s abundance of oil and natural gas. The U.S. remains the great arsenal of democracy. It should also be the great arsenal of energy.”

This week’s other notable op-eds/articles:

  • Bloomberg, 05/19/2015, “Manchin Backs Crude Export Ban Repeal Bill Introduced by Heitkamp,” by Ari Natter
  • Petro Global News, 05/17/2015, “U.S. Senate mulls lifting 40 year crude export ban,” by Nicolas Torres
  • Wall Street Journal, 05/17/2015, “EU Wants U.S. to Lift Ban on Oil Exports,’ by Gabrielle Steinhauser
  • Journal Record, 05/15/2015, “Garner: Remove the export ban,” by Jason Garner

From Our Blog This Week:

Stay Tuned…

  • 06/04/2015 – Hearing on Energy Accountability and Reform Legislation

Be sure to click HERE and check us out on Twitter by following us at @UnlockCrude so you can stay current by receiving daily updates about the most important news and discussions surrounding the crude oil exports conversation.


Movement to Lift Ban On Crude Gains Key Supporter

Democratic Senator Joe Manchin from West Virginia announced his support this week for Sen. Lisa Murkowski (R-AK) and Sen. Heidi Heitkamp’s (D-ND) recent bill that would end the outdated 40-year-old ban on crude oil exports. Enlisting Manchin as a co-sponsor continues to prove that the quest for enhanced energy security and economic benefits is a bipartisan effort.

During his comments on the issue he said changing this policy would “improve our national security interests by reducing our trade deficit … expanding our competitive edge in a global marketplace, and providing a stable source of energy to our allies so that they will no longer be dependent on undemocratic regimes.”

The idea of the U.S. exporting its abundant energy supply to our allies in the global market, has many officials in Europe and Asia eager and optimistic about the progress being made on both sides of the aisle. In an interview with The Wall Street Journal this week, Maros Sefcovic, the EU’s energy chief, said that allowing crude oil from the U.S. to the EU is one of the bloc’s goals for TTIP, which is currently under negotiation.

“We believe that the energy chapter in TTIP…could make a quite important contribution to the mutually beneficial trade exchange, but also to the energy security of the EU,” Sefcovic stated.

At an event on Capitol Hill hosted by ACCF, featuring Sen. John Hoeven (R-SD) and a panel of energy policy experts discussing the importance of permitting crude oil exports, Taksashi Kume, special advisor to the Japanese Ministry of Economy, Trade and Industry (METI), discussed the positive effects lifting the ban would have on our allies in Asia such as Japan. “Allowing crude oil exports would be beneficial to U.S. foreign allies like Japan, who are currently overly dependent on other nations, in the oil and gas sector,” said Kume.

Repealing the outdated and restrictive policy on crude oil exports will benefit the U.S. economy while also helping out our friends in the international energy market. This proposed bill gains more bipartisan support each day, which brings us one step closer towards the goal of complete energy-security.


Senator Hoeven and Experts Agree: It’s Time to Take Advantage of Our Resources

This morning, ACCF released a new policy brief on the geopolitical and economic impacts of ending the decades-long ban on U.S. crude oil exports. The Capitol Hill event included keynote remarks on U.S. energy policy by Senator John Hoeven (R-N.D.), followed by a panel of energy experts who expanded on a previous discussion on how expanding the production of crude oil and natural gas benefits our economy.

Dr. Margo Thorning, ACCF’s senior vice president and chief economist, moderated today’s forum and noted how the economic case for ending the ban on crude oil exports was already clear.

“Our nation’s energy landscape has gone from one of scarcity to one of abundance and it’s time for our policies to start capitalizing on that reality,” said Dr. Thorning “The United States is in the midst of an unprecedented energy boon which few experts predicted. The decades-old rationale for crude export restrictions no longer applies. The economic and national security benefits that will come from exporting our crude oil resources can only be realized in new policies that embrace this era of energy abundance.”

Matthew Slaughter, the incoming dean of Dartmouth’s Tuck School of Business and a former member of the White House Council of Economic Advisors, participated prominently in today’s Hill event as well as in the roundtable discussion that resulted in ACCF’s latest policy brief.

“The world supply of and demand for oil has changed so dramatically in the past few years, there is no compelling national security or environmental externality argument that I see for why we should restrict U.S. oil exports,” Mr. Slaughter said in the policy brief. “Restrictions on energy exports erode our credibility in important other policy forums where we are trying to get other countries to open up and be more integrated with the United States.”

Several dozen Hill staffers and Washington thought leaders gathered for the hour long Hill event this morning. In addition to the keynote remarks by Sen. Hoeven, and an introduction by ACCF President Mark Bloomfield, today’s event featured a robust discussion by .Professor Slaughter, Will Marshall, the president of the Progressive Policy Institute (PPI), Takashi Kume, special advisor to the Japanese Ministry of Economy, Trade and Industry (METI), and Raymond Keating, the chief economist for the Small Business & Entrepreneurship Council.

The panel discussed in length about how sharing our abundance of energy with our allies, particularly those in Asia, would be a win-win for both parties. The U.S. experiences a significant economic boost; both with an increase in national GDP and job growth, while our trade allies obtain an alternative, reliable and plentiful source of energy.

In addition to Mr. Slaughter, the ACCF policy paper included contributions by Frank Verrastro, senior vice president at the Center for Strategic and International Studies in Washington, and Jason Bordoff, professor of Professional Practice in International and Public Affairs at Columbia University, the founding director for the Center on Global Energy Policy, and a former Special Assistant to the President and Senior Director for Energy and Climate.


Strata Student Spotlight: To Increase American Oil Security, Let’s Export Crude Oil

Recently, a number of voices, including Rep. Joe Barton of Texas, have come out in favor of ending the United States’ ban on crude oil exports. That being said, there are still many proponents of the ban — those fearful that allowing crude oil exports will hurt U.S. energy security. Initially, the concerns of lifting the ban seems fairly intuitive–if we allow crude oil to leave the country, it makes sense that we would have less oil leftover for ourselves. However, this sentiment doesn’t match up with the reality of the ban.

For one, our oil is already being exported; the ban only affects crude oil, not refined products (e.g. the gasoline that actually makes its way into our vehicles). This results in refineries buying oil at the U.S. market rate (artificially low due to the ban), but selling oil at the world oil rate (and enjoying the commensurate profits). Not only does this mean that oil gets exported either way, it means that all the supposed “economic benefit” of keeping oil supplies bound for domestic refineries lands in the laps of refineries and no one else.

Even worse, the U.S. oil drilling industry is hit by the economic burden of being forced to sell oil at rates far below the rest of the world’s crude market. If we are concerned about having an abundance of domestic oil to guarantee energy security, drilling is where the lion’s share of efforts ought to be concentrated. Refining ought to take a back seat to developing a robust industry, the true key to a secure energy future. Sadly though, the current regime artificially slashes drilling profits, causing new oil exploration investment to slip below what it could be otherwise.

Politicians and policy drivers would do well to look beyond the obvious and intuitive sales pitch of the crude oil export ban and closely examine how it affects U.S. energy development. The era of the crude oil export ban ought to be brought to an end.

By Arthur Wardle, Strata Student Research Associate


Senators Make Bipartisan Move to Abolish Outdated Ban On Crude

Amidst the ongoing debate over crude oil exports, new and encouraging developments have surfaced from Capitol Hill. Senators Lisa Murkowski (R-AK) and Heidi Heitkamp (D-ND) have introduced  SB 1312, a bipartisan bill titled the “Energy Supply and Distribution Act of 2015,” which would abolish the 1970’s-era crude oil exports ban.

Both Senators emphasized the policy’s outdated nature, stressing the evolution and significant strides the energy sector has undergone over the past 40 years. “America’s energy landscape has changed dramatically since the export ban was put in place in the 1970s. We have moved from energy scarcity to energy abundance. Unfortunately, our energy policies have not kept pace,” Murkowsi said in a statement, according to The Hill.

An earlier assertion from the Brookings Institute highlights how crucial this bill is for the U.S. economy moving forward. “There are very few actions that the U.S. Government can take that as a long-term instrument of economic policy would make as measureable a difference in the economy.” The ability to supply our trade partners and allies with energy, will ensure America’s future as a global energy superpower, while simultaneously increasing U.S. energy production, creating more jobs, and growing the economy.

According to a study conducted by IHS, over the 2016-2030 period, updating our current policy on crude oil exports would generate 394,000-859,000 new jobs. Additionally, a similar study by the Brookings Institution, found that GDP would increase by anywhere from $600 billion to over $1.8 trillion by 2039, if crude exports were allowed from the U.S. It should go without saying, that any policy change that would increase job-growth and GDP is something no politician should ignore.

Energy exports will unlock the door to increased energy security and as a result, economic success. Senators Murkowski and Heitkamp have taken a major step towards a new age of American energy prosperity, by introducing legislation that will remove antiquated restrictions on one of America’s most abundant and desired products.


Trade Deals = Energy Exports

Last week, the Washington Examiner published an article  by Zack Colman that examined how the current Trans-Pacific Partnership (TPP) and Trade Promotion Authority (TPA) trade deals could pave the way for crude oil exports.  Colman discussed the need for the newly proposed TPP and the renewal of the TPA to include energy exports. This would improve trade relations with our foreign allies while demonstrating a practicing of free trade principles.

The article notes that leaked drafts show that the European Union has specifically requested a separate energy chapter in its free-trade deal, the Transatlantic Trade and Investment Partnership, in hopes of accessing U.S. crude oil. “It’s very clear in the European case,” said Scott Slesinger, legislative director with the Natural Resources Defense Council. “They want very specific language that does allow unrestricted export of energy.” The needs of our global trading allies are coming through loud and clear: they would like access to our abundant energy resources. The U.S. should heed their call and use this opportunity to implement regulations that stand to benefit both our allies and our nation.

This sentiment echoes the themes from an earlier op-ed published in Foreign Policy Magazine, by Senators John McCain, Lisa Murkowski, and Bob Corker. The senators wrote, in part, “The benefits to global security of allowing oil shipments to our trading partners are obvious and indisputable. Our friends in Asia … would have a new alternative source for their energy needs. European allies, struggling to diversify away from Russia, would be able to receive U.S. domestic oil almost immediately.” Continuing to limit both ourselves and our allies economically, does not qualify as free-trade.  For this reason, under the new trade deals, it is crucial measures are instituted that allow for the U.S. to assist its allies in the global energy market.

Regardless of free trade agreements, the United States is restricted from exporting crude oil due to a policy enacted in 1975. Allowing free and open markets is imperative towards maintaining successful trade relations with our allies. Should the two trade deals on the table make way for eliminating or relaxing exports restrictions, our allies in Europe and Asia would have an abundant new source of oil. To be consistent in its advocacy of free trade, both the U.S. Congress and President Obama should bring leadership to the cause of ending the ban on energy exports, by any means necessary.