DALLAS - The U.S. has gone from asking "Where can we get more oil?" to "Where can we put it?" and it is time to lift the export ban on crude oil and natural gas.
Thanks to a perfect storm caused by innovative drilling techniques producing significantly more oil and natural gas, a decline in domestic usage, and an outdated oil export ban from the 1970s, the US is "topping off" its storage capacity. Both the East Coast and Midwest regions, which includes the oil and natural gas storage hub in Cushing, OK, are near 80% capacity.
The US can ease the storage crunch and leverage the energy boom to the benefit of the U.S. economy by lifting the export ban on oil and natural gas, which would reduce the over-capacity, help stabilize energy prices and boost U.S. security policy.
Institute for Policy Innovation resident scholar Merrill Matthews, Ph.D. writes in “The Case for Permitting Crude Oil Exports” that the oil export ban, imposed during the 1970s oil shortages, is outdated and counterproductive in an age of dramatically rising U.S. oil production.
“Trade restrictions are almost always a bad idea,” said Matthews. “The U.S. is the largest producer of natural gas and may soon be the largest oil producer, even as U.S. demand is declining. We need to be able to sell those products to countries that need them rather than paying for long-term storage, especially when the current supply glut is straining storage capacity.”
Meanwhile, several other major producers are using energy access as a foreign policy weapon to enforce their will and create mischief.
In the paper , Matthews explores the numerous benefits of permitting crude oil exports, including:
- Stabilizing the supply of oil and gas;
- Creating an economic boom with more jobs and higher wages;
- Increasing government revenues;
- Lowering the trade deficit;
- Improving efficiency in the refining process; and
- Building energy security.
“What’s in the best interest of the U.S. is a healthy energy sector and efficient markets, where the price is a reflection of undistorted supply and demand,” concluded Matthews. “For 40 years, the U.S. economy and foreign policy have been constrained by politically repressive, oil-producing countries. That day could be coming to an end if we have the ability to export oil.”