The Iran Irony
Posted July 29, 2015
The current crude oil export debate basically is about global competition – and whether the United States will stop sanctioning itself and let an American commodity trade freely on the global market.
An irony – we’ll call it the “Iran Irony” – underscores the anti-competitive nature of our outdated ban on oil exports and the strategic shortsightedness of maintaining it.
The “Iran Irony” is this: While the U.S. advances a nuclear deal that would let Iran reemerge as a major oil supplier on the global market – to Iran’s economic and competitive gain – the United States denies itself similar benefits by banning its own crude exports. This is hurting America’s global competitiveness, diminishing the potential positive impacts of America’s rise as an energy superpower.
API President and CEO Jack Gerard encouraged ongoing congressional efforts to lift the U.S. export ban during a conference call with reporters. Gerard said the irony created by the Iran negotiations is helping crystallize bipartisan support in Congress to lift the ban:
“I think the current Iranian discussion is part of that (growing bipartisanship), that really shows as a lot of people reflect on this very important decision they’re going to make about this agreement reached regarding Iran – the irony that we would consider allowing them to have access to the global marketplace with their production, reaping billions of dollars, at the same time we deny our own companies and our own economy the same opportunity.”
Gerard tied U.S. oil exports to the positive effects of greater supply on the global market – specifically, American supply:
“Our ability to strengthen the global energy market against future disruptions will shape events around the globe, adding a key tool to America’s diplomatic arsenal. At this moment, U.S. diplomats are paving the way for Iran to reassert itself as a major world energy supplier. American voters understand that lifting the ban on Iranian oil resources, while maintaining a ban on U.S. companies, is illogical and restricts our own competitiveness. It doesn’t make sense. U.S. energy producers should not be placed at a competitive disadvantage to anyone, whether it is Russia, Iran or any oil producing country. This outdated crude exports policy must be repealed to level the playing field and allow the U.S. to flourish as a global energy superpower.”
Allowing exports of U.S. crude is connected to harnessing the U.S. energy revolution. It’s key to an overall, pro-development approach that would grow our economy, create jobs, generate greater U.S. energy security and help our allies abroad. Lifting the ban would recognize America’s opportunity to use its energy wealth for good here at home and overseas. Gerard:
“If we act now to harness this once-in-generation opportunity, America is poised to add billions to the domestic economy, creating jobs up and down the energy supply chain. And, as study after study has shown, consumers will win because gasoline costs are projected to go down by allowing crude exports. Today, our message to policymakers is simple: now is the time to act. It's good for American workers, good for our trade deficit, and good for our national security. Experts across the academic and political spectrum agree that American exports would spur greater U.S. oil production, put more oil on the world market, and reduce the power that foreign suppliers have over our allies.”
Studies have projected broad benefits to the U.S. from exporting oil. A study by ICF International estimated $15.2 billion to $70.2 billion in additional investment in U.S. exploration, development and production out to 2020, while adding 300,000 jobs and growing the economy. Another study, by NERA Economic Consulting, said that lifting the export ban could add $200 billion to $1.8 trillion to the economy between now and 2039. Gerard:
“When you do the economic analysis, this is a win for American consumers as well. Not only job creation … but the American consumer would benefit as we put more supply in that global marketplace. So, frankly, this is a no-brainer. This is something all Democrats [and] Republicans … should be for, and it’s great for America.”
America has a generational opportunity, provided by our ongoing energy revolution, to secure prosperity in the near- and long-term. We control that opportunity, but it could be squandered with self-imposed limits on our own ingenuity, innovation and enterprise – restricted access to energy reserves, regulatory red tape and policies. The crude export ban is one of those, a holdover from an era of energy scarcity that penalizes U.S. energy production, consumers and our economy. Gerard said the competitive edge the U.S. has because of surging oil output “has been dulled by outdated trade policies.” More:
“American crude sells below global benchmarks, putting a damper on new production and the jobs that follow. Lifting the ban, however, allows the right crude to flow efficiently to where it is needed. More oil is available in the global market, and consumers benefit from downward pressure on fuel prices. Other nations are focused on staying competitive in a low-price environment. And policymakers see that every new well that is or isn’t drilled has an impact on U.S. jobs, U.S. energy security, and future economic growth.”
U.S. energy policy should sustain and grow production as a means to serving American market competitiveness – again, underscored by what could happen, with U.S. assistance, with Iranian oil exports and access to the global marketplace.
There’s a similar conversation revolving around the administration’s nearly seven-year delay of the Keystone XL pipeline. The pipeline would be part of a holistic U.S. energy strategy but is being blocked for political reasons when the objective facts argue strongly for its approval. It’s an unfortunate reality also underscored by current talks with Iran, Gerard said:
“In the current environment, the crude discussions involving Iran … raises another irony here – that at the same time we’re considering allowing Iran access to the global energy markets, that we would deny our best trading partner, Canada, access to U.S. refineries to refine their product. I think this debate all joins together, and those elected to represent the American public have got to decide how they reconcile these different positions as we look at global energy, we look at the United States from an economic standpoint, and I think that issue of the Keystone XL pipeline plays right into that conversation.”
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and six grandchildren.