This commentary originally appeared on Fox News on September 10, 2015.
The vote Thursday by the U.S. House subcommittee on Energy and Power to repeal the now outdated ban on crude oil exports benefits every American. Repealing this prohibition will help revive our economy and protect our country’s security.
The energy landscape in the world has radically changed within the last few years because of surging production of oil and natural gas in the United States. Unimaginable a few years ago, the U.S. became the world’s largest producer of petroleum and related liquid fuels in 2013. More than three-fourths of the increased global oil production is now from domestic oil fields.. And our imports of oil have decreased by roughly 60 percent since 2007
This sea change is the achievement of a mix of innovative technologies, known as hydraulic fracturing, applied by small and independent oil companies in multiple states. The shale revolution has been so successful that it has produced a surplus of crude oil.
For our country to benefit from the colossal energy wealth now at our fingertips, the ban on oil exports must be repealed.
Although both chambers of Congress will likely pass the legislation, it’s unclear whether the President will sign it. Given that the productivity of upstream oil and gas businesses has been a bright spot in an otherwise historically dismal economic recovery, he should sign this vital legislation.
Congress originally imposed the ban on domestic oil exports in the early 1970’s in response to the Arab oil embargo and an assumption that U.S. oil and gas production would continue to decline. Now we have a large oil surplus that creative technology made possible and can continue.
We’re just in the beginning of the shale revolution. Access to the massive store of energy now recoverable in shale is widely projected to expand. Politics may shackle but cannot destroy the success of these technologies. The conditions which led to the ban on exporting crude oil no longer exist. there’s no good reason to continue the ban on international trade of this most powerful of global commodities.
Half of the drilling rigs have left the oil fields since the plunge in oil prices that began last summer. Rig count, however, is not a good indicator of production levels in the shale fields. Production has continued to rise to historically high levels. According to current figures, domestic production in 2015 will average a whopping 9.3 million barrels per day.
By freeing the oil market from a failed oil exports ban, oil producers have the opportunity to meet the needs of a much larger global population and consumers can continue to have relief at the pump. This also makes us more secure as the U.S. is less reliant on Middle East oil from countries that are not our friends.
Labor Day travelers felt relief at the pump when they paid the lowest average price for gasoline in more than a decade. If basic economics and the conclusions of multiple government reports are worthy guides, we should expect lower gasoline prices with the end of the export ban.
Consumers benefit most in markets that freely trade goods. Limiting the global oil supply by prohibiting sale of domestically produced oil keeps global oil prices artificially high. For decades, prohibiting U.S. oil exports has driven prices at the pump higher than they otherwise would be.
Americans win from ending the oil export ban as freer markets have repeatedly proven that they are the best path to fuel prosperity.
Ph.D. Economist at the Texas Public Policy Foundation. Blog posts are publications by the author.