Tags: US | oil | exports | ban

Obama Needs to Lift Crude Oil Export Ban This Year

By
Thursday, 28 Aug 2014 01:45 PM Current | Bio | Archive

University of Texas' annual energy poll found that 58 percent of Americans incorrectly thought that America's major source of foreign oil is Saudi Arabia and another 15 percent say it's Iraq.

The truth, of course, is that America's biggest oil suppliers is Canada, which provides 28 percent of U.S. oil imports. If you add in Mexico and Venezuela, that number goes up to 50 percent.

How much oil do we actually get from the Middle East? Saudi Arabia and Iraq provide just 22 percent of U.S. oil imports.

This misperception dates back to the 1973 oil embargo by OPEC, when U.S. drivers waited in long lines for gasoline. This isn't likely to happen again.

The reason is that the United States has been moving to self-sufficiency for many years, and today, U.S. field production of crude oil has reached 259.1 million barrels — only slightly less than the 290.8 million barrels of crude oil and petroleum products we import, according to The Wall Street Journal.

In fact, only 33 percent of petroleum consumed by Americans comes from foreign sources — the lowest since 1985.

But like a bad hangover, one of the lasting results of the 1973 oil embargo is that in 1975 the government halted all U.S. exports of oil. It might have made sense then, but not now.

IHS Energy predicts that gasoline prices in the United States could fall by 8 cents a gallon if U.S. oil exports were widely expanded, as more oil flooding into the oil market would raise supply and reduce global energy prices.

Unfortunately, this message has been lost to lawmakers, even to some Republicans who are largely in favor of lifting export bans on oil. In fact, most industry analysts agree that by increasing oil exports, domestic gas prices will fall.

The other effect of exporting oil is that it would start more domestic oil exploration, creating millions of good-paying American jobs. We've already seen this in states like South Dakota, Montana and Texas, where extracting oil from shale is creating an unprecedented demand for oil workers.

The Council on Foreign Relations estimates that deficits in U.S. petroleum trade have been equal to a large fraction of the imbalance between U.S. imports and exports. Between 2000 and 2012, the cumulative total of U.S. trade deficits in crude oil and refined petroleum products amounted to $2.87 trillion, 40.5 percent of the cumulative deficits in all goods and services during the period.

Which country accounts for much of our trade deficit? China. Which country is thirsty for more oil? China.

What a difference it would make to start exporting more to China, instead of importing.

The good news is that a sea of change is slowly occurring. In June, the Department of Commerce determined that two Texas companies, Pioneer Natural Resources (PXD) and Enterprise Products Partners (EPD), could start exporting an ultralight type of crude called condensate. That constitutes the biggest loosening of the U.S. ban on oil exports since it was passed in 1975.

Blake Clayton, an adjunct fellow for energy at the Council on Foreign Relations, notes that oil production has grown more in the United States during the past five years than anywhere else in the world, and that "removing all proscriptions on crude oil exports, except in extraordinary circumstances, will strengthen the U.S. economy and promote the efficient development of the country's energy sector."

In fact, he predicts, "Were the ban overturned today, crude exports would immediately rise by several billion dollars a year, according to industry executives, likely surpassing 500,000 barrels per day by 2017." To put that in perspective, that's approximately 5.2 percent of the 9.5 million barrels per day the United States is expected to produce by then.

Think what impact that would have on our economy, job creation and our security.

Many people suspect that Obama will not lift the crude oil export ban during 2014. Part of the reason is environmentalists — energy's old nemesis — claim that more domestic drilling will have dire carbon emission effects. A baseless argument.

And still others have lost the vision of an energy-independent United States.

If nothing else, just revisit the old axiom of supply and demand. The world needs more oil. The United States can greatly increase its production. The United States can have a big impact on world pricing of petroleum products. U.S. citizens would benefit with more jobs and lower energy prices. Hard to see the downside here.

It seems to me that if the United States can impact significantly the global energy market, we would have increased leverage in our relationships with the rest of the world. And boy . . . that is in short supply.

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
NealAsbury
University of Texas' annual energy poll found that 58 percent of Americans incorrectly thought that America's major source of foreign oil is Saudi Arabia and another 15 percent say it's Iraq.
US, oil, exports, ban
779
2014-45-28
Thursday, 28 Aug 2014 01:45 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved