U.S. Oil Exports – For Our Security and the World's

Mark Green
Posted July 30, 2015

We’ve stressed the economic benefits of lifting the ban on U.S. crude oil exports – GDP growth, job creation and consumer savings – because they’re considerable and would affect virtually every American in a positive way. No less important are the benefits for American security and foreign policy from letting U.S. crude trade freely in the global marketplace. API President and CEO Jack Gerard:

“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. 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.”

Others echoing this point have included Leon Panetta, President Obama's former defense secretary and CIA director, and Stephen Hadley, former national security adviser to President George W. Bush, in a Wall Street Journal op-ed; retired Gen. James Jones, President Obama's former national security adviser, in comments to USA Today; and Michele Flournoy, President Obama's former undersecretary of defense for policy, in congressional testimony this week. Flournoy:

“… we should not underestimate the degree to which becoming an oil exporter could impact perceptions of the United States as a vital global power, helping to discredit erroneous narratives of U.S. decline. … When more supply originates from producers who are not vulnerable to political instability, conflict or threats to their energy infrastructure, the overall market becomes more stable. … [A]llowing U.S. oil exports would enhance the energy security of key U.S. partners, from Poland to India to Japan. Indeed, our closest allies in Europe and Northeast Asia would welcome – and have asked for – the unrestricted export of U.S. crude oil. … Enabling U.S. oil exports would strengthen  our geopolitical influence, leadership and leverage with allies and adversaries alike.”

Petr Gandalovic, the Czech Republic’s ambassador to the U.S., probably said it best during a congressional hearing earlier this month, supporting legislation that would lift America’s oil exports ban:

“I cannot assure you that if you pass this bill there will be a direct purchase from our refineries … of U.S. crude oil. I can predict that if there is an alternative coming from the U.S., as a democratic state that doesn’t use natural resources as a political tool, the world itself will be a … safer place.”

Timely is a new report released by the Atlantic Council this week that builds on these arguments. The report, co-chaired by U.S. Sens. Lisa Murkowski of Alaska and Mark Warner of Virginia, says that surging domestic energy production and reduced imports (see chart below) have given the United States the opportunity to combat terrorist threats in the heart of the world’s global energy reserves while promoting the rule of law and international order.

It calls for lifting the ban on oil exports, as well as restrictions on U.S. export of liquefied natural gas. It says the United States should counter “global energy poverty” by supporting development of “affordable and reliable energy systems,” including traditional and renewable resources. The report urges the U.S. to work with Canada and Mexico to use North American energy and infrastructure to “advance common security goals” while also supporting the energy security of our European and NATO allies. The report:

Our energy abundance impacts global energy security as well as domestic security. Our resource base gives us the ability to make energy markets more competitive and transparent, and to reduce the impact of oil and natural gas supply disruptions from abroad. … America now must practice the philosophy we have preached at home and abroad since 1973: join the global market and reject protectionism. The United States has many tools with which we can help other nations gain autonomy, prosperity, and energy security, but allowing unfettered exports of our natural gas and oil abundance would be a force multiplier with powerful results.

The report argues that the current oversupply of crude oil on the global market is unlikely to last, and given the fact that more than half of the world’s oil reserves lie in the Middle East and North Africa, “it would be negligent not to plan for significant oil supply disruptions.” American energy could be the key countering force:

America’s energy abundance cannot solve every nation’s energy insecurity, or replace all disrupted supply from the Middle East. But we can engage in an unprecedented level of support and self-help. We can give other nations a choice in where they buy their oil and gas. With modest exports, or even with the mere prospects of exports, we can make energy markets more competitive and diminish the market power of those who seek to earn monopoly rents. We can lower global energy prices by increasing global supply.

And:

While we cannot be the world’s market balancer like Saudi Arabia has been, with spare capacity in the ground to bring to market in thirty days, we can be the world’s surge producer. American shale oil and gas can come to market in months, faster than deep water or other forms of oil and gas production that can take years. All we need to do is to allow the price signals of global energy demand to reach the American entrepreneurs who can deliver surge supply. This requires removal of export constraints designed for another time and another market.

It’s time to act, and it’s encouraging to see Congress beginning to move on this issue. Bipartisan energy legislation should lift America’s outdated, self-sanctioning crude oil export ban. U.S. producers shouldn’t be disadvantaged in competition with other global suppliers. Freeing them, allowing U.S. crude access to global markets would be good for America, good for our friends around the world. Gerard:

“Bipartisan momentum is stronger than ever, and we urge members of the House and Senate to schedule committee and floor votes on this issue as soon as possible. Now is the time to send a message to allies around the world that America is ready to lead.”