U.S. Energy Leadership, Security Argue for Continued Crude Oil Exports
Posted February 1, 2022
As inflation here at home and Russian-led global instability flare to levels unseen in recent history, there is a common thread that could make both crises worse – a ban on U.S. crude oil exports. We’re encouraged that the Biden administration has acknowledged that an export ban isn’t the solution; after all, officials have said that they aren’t considering one. But as policymakers are pressed for action and evaluate their options, it’s worth revisiting a few reasons why this would be the wrong path to pursue.
Crude oil and natural gas exports strengthen the American economy and give the U.S. enhanced ability to alleviate international supply disruptions.
The same factors are at play as when then-President Obama in 2015 lifted a nearly 40-year-old crude oil export ban in the first place, and the reasoning hasn’t changed: The ban was a relic of 1970s-era energy scarcity and was counterproductive in light of America’s world-leading natural gas and oil production. Increased domestic production has made the U.S. a cornerstone of the global energy market.
Exports mean jobs and economic growth. Exports also mean increased government revenue, without tax increases that can slow economic growth. The additional production associated with exports generates billions of dollars annually in much needed federal and state government revenue.
Reimposing a ban on U.S. crude oil exports could result in higher energy costs for American families and exacerbate inflation.
The biggest misconception around a potential crude oil export ban is that it would somehow reduce energy costs for domestic consumers, when in fact reimposing a ban could result in additional burdensome outcomes in the face of inflation. A sudden rise in oil prices could tip nations back into recession at a point when many economic recoveries around the world remain fragile given COVID-19 volatility.
Here at home, studies have found that the unintended consequences of a new U.S. crude oil ban would likely increase gasoline prices rather than lower them, exacerbating inflation. Just as in 2014-15 – when researchers accurately predicted that lifting the ban would help put downward pressure on gasoline prices, create jobs, grow our economy and lower our trade deficit – recent analyses confirm that these benefits continue to bolster America.
Energy exports strengthen energy security here at home and support our allies overseas as they try to strengthen their own national security interests against aggressors.
American allies across Europe rely heavily on Russia for its energy, and there’s mounting fear that Russia will weaponize its own resources by restricting oil and gas supplies to Europe if the West carries out its threat to impose sanctions. But it doesn’t have to be that way – the U.S. has abundant energy supplies that can be used around the world, while keeping energy costs manageable here at home. By exporting our resources, we not only promote American energy and advance our interests, but also support our allies overseas as they try to bolster their own national security interests against Russian aggression.
Policymakers have already tried to slow domestic production while asking – unsuccessfully – for other nations to step in and raise supply. The solutions we’re looking for aren’t overseas. They already exist here at home, with responsibly produced American natural gas and oil. Banning U.S. crude oil exports could herald an extreme return to dependence on foreign nations that don’t share American interests, and overall global production could struggle mightily to meet demand as an enabler of economic and human development.
About The Author
Lem Smith is API’s vice president for Federal Relations. Lem joined API in February 2020 as vice president for Upstream Policy & Industry Operations. He previously served as a principal at Squire Patton Boggs, an international law and public-policy firm, where he advised private and public sector clients on federal and multi-state policy matters and provided counsel on communications strategies, campaign affairs and crises management. Previously, Lem was director, U.S. Government & Regulatory Affairs at Encana, and responsible for all aspects of U.S. government relations and regulatory policy matters at the state and federal levels. Prior to that, Lem was director of Government Relations for Kerr-McGee Corporation. Lem began his career on Capitol Hill, working for U.S. Senate Majority Leader Trent Lott, U.S. Rep. Roger Wicker (Mississippi) and the late U.S. Rep. Charlie Norwood (Georgia), where he negotiated key member priorities within the 2005 Energy Policy Act (EPAct). Lem is a graduate of the University of Mississippi.