By George David Banks Upon releasing their comprehensive energy policy package last month, House Energy and Commerce Committee Fred Upton, R-Mich., and Energy and Power Subcommittee Chairman Edward Whitfield, R-Ky., noted, “Our energy realities have changed dramatically — we’ve gone from bust to boom practically overnight. Today’s energy policies are lagging far behind, and are better suited for the gas lines in the 1970s than this new era of abundance. We need policies that meet today’s needs and are focused on the future.”
I couldn’t agree more with Upton and Whitfield. We are in the midst of an energy renaissance and it is well past time for our energy policies to catch up. However, while their agenda is a good first step, I would urge them to broaden it to include a specific look at lifting the ban on crude oil exports and expanding liquefied natural gas exports. Then our policies truly will be focused on the future.
In February, the Energy Information Administration projected that U.S. crude oil production could continue to rise from its 30-year high of 9.2 million barrels a day to an all-time crude oil production record in 2016; beating the previous high set in 1970. But for over four decades, U.S. companies have been banned from exporting crude oil. Bell-bottom jeans and platform shoes went out with the ’70s, so why hasn’t this outdated energy policy? Especially in light of the multiple macroeconomic studies that extoll the benefits of lifting the ban on crude oil exports — increased employment, economic growth and improved overall consumer welfare.
In a study commissioned by the Brookings Institution, the National Economic Research Associates found that eliminating the ban on crude oil exports could inject between $600 billion and $1.8 trillion into the domestic economy and add at least 200,000 new jobs. The NERA study only reinforced an earlier IHS analysis that had similar findings, saying that lifting the ban would generate one million jobs at its peak.
Along with the oil production boom, we have become the world’s largest producer of natural gas. And much like lifting the crude oil export ban, expanding LNG exports would bring substantial economic benefits to Americans. ICF International concluded in a study that LNG exports could add between 73,100 and 452,300 jobs in our country by 2035 and benefit almost every U.S. state either directly or indirectly.
Unfortunately, we have yet to take full advantage of the opportunity at hand thanks to our abundant shale gas resources and advancements in technology. In this case, the culprit is a backlog of applications pending review at the Department of Energy to export LNG to countries without a free-trade agreement with the United States. LNG liquefaction and export facilities are capital-intensive projects costing billions of dollars and taking years to permit and construct, and DOE’s piecemeal approach risks yielding our LNG energy advantage to other nations also building terminals to access international demand.
Not only will encouraging the export of our country’s abundant natural resources benefit Americans here at home, but it will also make the United States a global energy leader in energy diplomacy, one of the four policy areas stressed in the Energy and Commerce Committee’s legislative framework. The combination of increased domestic resources and an expanding global market presents our country with a historic opportunity. It will allow us to strengthen our economy and create jobs while increasing energy security for our allies abroad. Unless our policymakers take meaningful action to support exports — rather than restrict and delay them — countries that will use energy as leverage and a political weapon will continue to dominate the market for our allies in Asia and Europe.
Finally, the crude oil export ban and federal foot-dragging on LNG export permits is also inconsistent with our long-standing position on free trade and damages our credibility on the world stage. The United States, which has been a staunch promoter of free trade, stands to violate its own policies and international trade regulations if it continues to restrict and limit energy exports. History teaches us that open markets are essential to global economic prosperity and political stability. It is paramount that we uphold our nation’s economic foundations of free markets and free trade by ending our own de facto trading restrictions.
Republicans should be applauded for recognizing it’s time to move forward with energy policies that reflect our new role as a global energy leader. But to truly embrace that role and unlock our energy potential, Congress should lift the decades-old ban on crude oil exports and expand LNG exports. We must take every advantage of our current energy boom because we may not get this chance again.
George David Banks is the executive vice president of the American Council for Capital Formation.
The 114th: CQ Roll Call’s Guide to the New Congress
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