By Dr. William Shughart and Dr. Margo Thorning
December 17, 2014
Over the past several years the United States has achieved an energy turnaround that few experts could have anticipated. Led almost singlehandedly by improvements in shale production, the country has transitioned from a position of foreign dependence to a global energy leader — bolstering American consumers, businesses and manufacturers at every turn.
Our energy transformation has been so remarkable, it has outpaced policy in Washington, which now threatens to slow the wheels of commerce. Today, restrictions on crude oil exports dating back to the 1970s have — given “tight” domestic refining capacity — created a glut of oil supplies here at home, that could disincentive further production and leave valuable energy resources to languish.
To secure continued growth, it’s time lawmakers modernize outdated energy export policies. Fortunately, with the midterm elections squarely behind us, there are signs Washington is ready to act.
Rep. Edward Whitfield, R-Ky., chairman of the House Energy and Power Subcommittee, held a hearing last week to review the Energy Policy and Conservation Act of 1975, which limits most crude oil exports. Although a growing consensus has emerged within the Capital Beltway mirroring the rest of the country’s eagerness to unshackle our global trade barriers, the hearing is the first step among members of Congress to reconsider the outdated export restrictions.
“Our energy landscape looks much different than it did 40 years ago,” Whitfield and Rep.Fred Upton, chairman of the House Energy and Commerce Committee, said in a statement prior to the hearing. “The time is now ripe to revisit and consider whether some of the energy policies rooted in the past still make sense today.” Additionally, Rep. Joe L. Barton, R-Texas, introduced H.R. 5814, which removes all restrictions on the export of crude oil from the United States.
That’s sensible leadership. And it’s bipartisan. Texas democrat Rep. Gene Green, who has served as a member of the House Energy and Commerce Committee for the past ten years, recently added his name to the chorus of lawmakers who have expressed support for reasonable exports.
Restrictions on U.S. crude oil exports were enacted following the oil shortages of the 1970s. At the time, and in the decades that followed, America’s reliance on foreign oil left the country vulnerable to shocks in the global market. Trade bans were intended to help mitigate such disruptions by keeping domestically produced oil and gas here at home.
Even as recently as ten years ago, domestic oil production was not sufficient to warrant consideration of repealing the bans altogether. But to borrow a theme from the late blues singer Esther Phillips, what a difference a few years makes.
Today, as a result of expanded shale development technology, the United States has become not only the world’s largest producer of oil and natural gas, but in 2013 U.S. proved reserves of crude oil increased for the fifth year in a row, exceeding 36 billion barrels for the first time since 1975. In fact, America’s limited exports of our abundant resources (to Canada) have helped alleviate fluctuations in the international prices. The Financial Times recently reported that in the absence of U.S. supply, oil prices would likely have reached $150 per barrel earlier this year, compared to the impressively low prices we see now.
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