After the House of Representatives’ recent vote to lift a 40-year-old ban that prevented exporting domestically drilled oil, President Obama promised a veto. He claimed that “Congress should be focusing its efforts on supporting our transition to a low-carbon economy.”
The president’s veto threat is clearly designed to please environmental extremists who oppose energy production. But, in reality, allowing the United States to sell oil to foreign markets would have a negligible environmental impact. Meanwhile, retaining the ban denies our economy the chance to grow.
Instead of bowing to the demands of a few green radicals, President Obama should do what’s in the best interest of the nation: Support lifting the oil export ban.
The ban has its origins in the oil crises of the 1970s. In 1975, following the Arab oil embargo, then-President Gerald Ford signed the Environmental Policy and Conservation Act. The law was designed to ensure a stable oil supply and banned the export of unrefined domestic oil.
Banning exports in the ’70s didn’t make sense: Economics 101 should have been enough to convince lawmakers that it was a terrible idea back then; it’s an even worse idea now.
America has become an energy giant. New technologies such as hydraulic fracturing and horizontal drilling have boosted domestic production. In fact, the United States has passed Saudi Arabia as the world’s top oil producer.
The rapid expansion of domestic oil supplies has dramatically driven down prices. Crude oil in the United States is now about 10 percent below the global average. This means less revenue for every barrel sold, leading some domestic producers to cap wells that would otherwise be profitable.
Lifting the oil export ban would deliver huge benefits. The firm IHS estimates that a repeal would boost domestic oil production by 1.2 million barrels per day and create an average of 400,000 new jobs per year between now and 2030 – with a peak of 1 million new jobs in 2018. Gas prices would drop by as much as 12 cents per gallon, saving U.S. motorists $265 billion over the next 15 years.
Repealing the ban would also add between $600 billion and $1.8 trillion to the gross domestic product (GDP) through 2039, according to the nonpartisan Brookings Institution. Even Mr. Obama’s former economic adviser, Steve Rattner, noted that oil exports mean “more production, more jobs, and less reliance on imports and an improvement in our trade balance.”
Global security will improve as well. U.S. exports will drive foreign prices down slightly, but the bigger impact will be a more stable supply for our allies and a reduced dependency on hostile nations. Eastern European NATO states import 80 percent or more of their natural gas from Russia. Similarly, our Southeast Asian allies rely on fuel shipped via contested South China Sea routes.
Imagine how a consistent American supply could lessen tensions in these regions. President Obama’s own former undersecretary of defense, Michele Flournoy, told Congress, “Enabling U.S. oil exports would strengthen our geopolitical influence, leadership and leverage with allies and adversaries alike.”
The case for lifting the ban is overwhelming. Not surprisingly, a recent poll shows three in four Americans supporting a repeal.
But radical environmentalists believe that anything that might lead to more oil extraction is wrong. And, just as he did with the Keystone XL pipeline, the president has sided with the radicals.
With the Senate about to put this decision on the president’s desk, it’s high time for the White House to ignore the radicals and embrace common sense by revoking the oil export ban.
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