McCaul, Craddick: Lift the oil export ban
Just a few years ago, many Americans felt hopeless that the U.S. would ever reduce its dependence on foreign energy. Relying on suppliers from unstable nations that don’t share our interests, consumers felt the effect of pricing volatility, violence and political instability hitting them at the gas pump with prices reaching $4.00 per gallon. For too long, we allowed hostile sources of energy to control our economy and dictate our foreign policy.
But true to the spirit of American ingenuity and innovation, U.S. oil producers fought back. In the past decade, industry has developed new technologies leading to a rapid turnaround in the development of domestic energy that is generating new economic opportunities and which could have a profound effect on our foreign policy. Unfortunately, energy producers can’t innovate their way around a federal ban on crude oil exports that restricts their right to free-market competition in international markets and creates an unleveled playing field for domestic oil production. As the industry innovates with technology, government must innovate with policy.
While America is now the world’s leading developer of oil and natural gas, U.S. law currently prohibits the export of crude oil. This means that domestic producers have only one buyer: domestic refiners who are not optimized to handle the type of “light sweet” crude oil being discovered.
In July, the U.S. produced crude at a faster pace than any time since the 1920s translating into record refining. Yet the number of drilling rigs is down by more than half and thousands of jobs have been slashed as the price of oil has tumbled; the result of a deliberate and calculated economic attack against U.S. producers, led by OPEC. Here in Texas, the oil and gas industry has felt the effects and has been forced to cut jobs in order to stay in business. In fact, newer sources of oil found in shale formations make up the majority of production in Texas today but are more costly to produce, leaving places like the Eagle Ford Shale hit even harder. This is costing tens of thousands of jobs and billions in revenues for families and communities in key producing states like Texas.
Understandably, motorists are happy about cheaper gasoline at the pump, but the cost to crude oil producers, their employees and our economy is huge. While the crude oil export ban may have made sense in the wake of the 1970s Arab Oil Embargo, this archaic policy is no longer justified given today’s market conditions. In fact, even President Obama’s Energy Information Administration predicts that repealing the ban would likely reduce gasoline prices further while expanding markets for independent producers to sell their product.
Energy is critical not only because it fuels our economy, but because it is vital to national security. Russia uses energy as a weapon to bully neighbors in Europe and Central Asia. We believe it is time for our abundant energy supply to set them free. The geopolitical benefits of American energy exports as a diplomatic tool will both make us stronger economically and provide critical support to our partners around the world.
It is a sad irony that the president’s agreement with the Islamic Republic of Iran allows the world’s largest state sponsor of terrorism to export its oil, while prohibiting our companies from doing the same.
Regardless, President Obama likes to tout the growth of energy production during his tenure. He just doesn’t like to drill for it, transport it or allow American producers to sell it to the world. Lifting the ban on crude oil exports will mean greater energy independence, more jobs, lower gas prices and a boon to our economy. And, it will allow energy powerhouse states like Texas, for whom oil and gas contributes to more than 40 percent of its total economy, to fully drive the U.S. toward reaching its true oil-producing potential.
Around the world, our friends and allies are looking for the same thing we are here at home: a stable and reliable supply of American energy. Let’s put American jobs and American security first. Let’s end the ban on crude oil exports.
McCaul, a Republican, represents Texas District 10 in the U.S. House of Representatives. Craddick is a Texas railroad commissioner.