Back during the "energy crisis" of the 1970s, Congress voted to ban the export of oil produced in the United States. Why? Because the federal government had imposed domestic price controls to combat inflation and crude export restrictions were thought necessary to make those price controls effective. The economically idiotic price controls are long gone, but the export ban remains.It is past time to lift the ban and allow American producers to sell their crude in international markets.
A 2014 study by researchers at the Washington, D.C.-based think tank, Resources for the Future finds that lifting the ban would likely reduce domestic gasoline prices and boost investment in oil production. How so? Basically the fracking boom has so increased domestic production that it is right now outstripping refining capacity, thus enabling the bottlenecked refiners to buy domestic crude at discounted prices. Lower domestic prices also means that producers have less incentive to invest in more production. The RFF researchers note lifting the ban would mean that domestic oil prices would rise, but they calculate that greater efficiencies at refineries would more than offset that increase. The ultimate result would be gasoline prices that are between 1.7 and 4.5 cents per gallon lower.
They conclude that …
… the economic arguments for lifting the ban are strong, based primarily on the gains from free trade and the example it sets when we live by our market principles. Such action will create winners and losers, however, and may lead to increases in greenhouse gases.
President Obama opposes lifting the ban as do various Congressional Democrats. Why? Sen. Edward Markey (D-Mass.) offered this rationale:
"It makes no sense to export our oil abroad when we still import millions of barrels of oil a day and consumers are saving at the pump because of discounted U.S. oil prices."
The House has acted. So now it's time for the Senate remove an export ban which is already 40 years past its sell-by date.