The U.S. trade laws, especially the 39-year old ban on crude oil exports, is “antiquated, and at times, absurd,” says the Republican Chairman of the Senate energy committee.
I couldn’t agree more.
Lisa Murkowski, an Alaska Republican, a lawmaker famous for her wisdom and fairness, called out President Obama for maintaining trade laws that date back to the early 20th century.
In a white paper released Monday, Murkowski spoke for us American independent oil and gas producers, forced to store excess crude, or unfairly sell it below market prices, instead of selling it on the global market, like everyone else.
She said, because of our “technology prowess, and American grit,” there is a major resurgence in our energy sector. And she’s right. Things have changed. We need to stop looking at the glass half empty and realize, we are sitting on a gold mine.
We don’t have to bow down to OPEC anymore. We don’t have to live in fear.
We can live with a mentality of abundance, not one of scarcity, rooted in the mid-1970s when OPEC strangled the U.S. and caused us to pass the export ban in the first place.
Even the Energy Information Administration, the independent statistical arm of the Energy Department, said so in its 2014 Energy Outlook.
EIA said U.S. production would rise by 800,000 barrels per day every year until 2016, when it will total 9.5 million bpd.
In 2019, domestic production of crude oil should account for 63 percent of total supplies. That’s startling considering that in 2011, domestic crude covered 38 percent of total U.S. supplies.
That means we have enough oil to supply our own country and sell it abroad where there is a raging demand.
How many years do we want to kneel down before OPEC, begging for one more barrel of oil because the Fourth of July driving season is on the horizon?
The goal of our country is to be energy independent. We are here. Let us produce, supply, and sell into the global market.
Lifting the ban on U.S. crude oil exports would increase domestic oil production. More production requires more workers, which means more jobs and services for those workers, and in turn, more revenue for those communities.
If the ban were lifted, the oil industry and its investors would feel secure enough to invest in more production technology, which would make it easier and cheaper to producer our precious commodity.
The additional production means additions supplies for the U.S., and for the global market, supplies that would compete with global supplies from OPEC. Our new infusion of crude into the world market would put downward pressure on the global price of oil.
That means lower gasoline prices and lower prices for petroleum products, both of which mean lower prices for goods and services for all Americans.
Those opposed to lifting the ban and creating a free market fear two things.
They fear that if U.S. crude is exported, the price of oil will skyrocket, and the price of gasoline will spike. This is patently false, and it’s based on a misunderstanding of oil market dynamics.
Oil is a global commodity, whose price is subject to global market forces of supply and demand, and subject to geopolitical issues, such as the Arab spring that shut off more than a few spigots in the Mideast.
There’s another contingent operating on fear. Some refiners want to continue buying discounted crude from American producers, refining products, and selling them abroad. The refining industry is split on this issue.
Does that seem fair? To oppose lifting an export ban on crude while your business is enjoying the fruits of exports?
The U.S. can export coal to the Netherlands, Morocco, and Germany; distillate fuel to France, Chile, and Argentina; petroleum coke to Turkey and China; gasoline to Colombia, Brazil, and Panama; jet fuel to Britain, Israel, and Nigeria; natural gas to Canada and Mexico; and, natural gas liquids to Switzerland, Honduras, and Aruba,” Senator Murkowski aptly said.
Lifting the crude export ban will mean increased production of crude in the U.S., which will continue to benefit U.S. refiners. There’s plenty of room for growth, especially for refining light tight oil.
The crude oil export ban must be lifted.
Chris Faulkner is the Founder and CEO of Dallas-based Breitling Energy Corporation.