This month, the U.S. Energy Administration (EIA) released their monthly petroleum supply report noting that U.S. domestic oil production fell in September for the third month running. This is a sign that unchanging low prices and record high domestic crude oil production is facilitating a slowdown in our nation’s oil boom. The falling output should serve as a wakeup call to our lawmakers that we are on the threshold of endangering one of our economy’s biggest assets unless Washington has the resolve to take action.
As we all know, the U.S. has experienced a record breaking transformation in its energy landscape, but what is often overlooked is the significant investment and capital spending by our nation’s energy sector that has made this possible. According to a report by the Progressive Policy Institute (PPI) released in October, over the last three years the top four U.S. oil and gas producers have invested more than $100 billion in domestic buildings, equipment, and software. So the U.S. has clearly profited greatly from the investments made by the energy industry, now policymakers need to remove constraints on its continued growth.
One way to keep this industry booming all the while promoting domestic job and economic growth is by removing the ban on exports of domestically produced crude oil. Doing so will help provide certainty to this crucial industry and support U.S. energy production for decades to come. Currently, America’s current ban on crude oil exports, enacted in the wake of the 1973 Arab oil crisis to insulate against disruptions in supply, is suppressing U.S. production potential, future economic growth and job creation here at home.
The EIA projects that U.S. consumption of liquid fuels like crude oil will remain constant and ultimately decline during the next 30 years due to efficiencies in our system and moves toward a cleaner climate future. As a result, it is imperative we identify new sources of demand. Removing the ban on crude oil exports is one significant opportunity available. It would open up U.S. supply to global markets and provide domestic producers with the assurance of access to the international market place. Such assurance will help boost domestic investment, production and job growth.
Historically, the U.S. oil and natural gas industry has supported more than 9 million jobs nationwide and more than 7 percent of our country’s gross domestic product (GDP.) But in a year riddled with layoffs and cutbacks in this industry, strengthening the incentive to invest and produce by removing barriers to crude exports would boost both large and small companies in the energy sector. In fact, a Columbia University analysis found that lifting the current export restrictions could increase U.S. crude production by up to 1.2 million barrels per day between now and 2025. This production will in turn spur the economic predictions of countless macroeconomic reports that project crude oil exports would yield multiple benefits for our economy including jobs generation, increased U.S. GDP and continually low fuel prices.
Unfortunately, this economically sound policy change has endured its fair share of speed bumps including a veto threat from the White House of the House’s comprehensive energy bill that includes a crude oil exports provision.
It is time for lawmakers to push back against the administration on this issue. Congress has an opportunity to add language to the must-pass government spending bill that would allow for the export of domestic crude oil and we must not let this opportunity pass us by. President Obama’s support of free trade and its positive contribution to the American economy does not align with his current veto stance. Policymakers must set aside partisan politics and repeal antiquated energy policies like the ban that undermine economic growth. Failure to do so will only jeopardize the security of one of America’s economic aces.
Dr. Margo Thorning is the senior vice president and chief economist with the American Council for Capital Formation.