The economic case for allowing US crude oil exports is set out in a new paper (“The Economic Case for Lifting the Crude Oil Exports Ban”) released June 3 by Dr. Margo Thorning, senior vice president and chief economist of the American Council for Capital Formation, and Dr. William F. Shughart II, research director and senior fellow of the Independent Institute, J. Fish Smith Professor in Public Choice at Utah State University's Huntsman School of Business, and Strata fellow.
After a review of five respected, rigorously sourced macroeconomic studies, Thorning and Shughart lay out the significant domestic economic benefits as well as the geopolitical impact for our nation should Congress and the Obama Administration eliminate the ban on the export of US crude oil.
"Our nation's energy landscape has gone from one of scarcity to one of abundance and it's time for our policies to start capitalizing on that reality," Dr. Thorning said. "The US is in the midst of an unprecedented energy boon that few experts predicted. The decades-old rationale for crude export restrictions no longer applies. The economic and national security benefits that will come from exporting our crude oil resources can only be realized in new policies that embrace this era of energy abundance."
Professor Shughart added, "These studies are conclusive that lifting the crude oil export ban will grow our economy and create jobs. Additionally it would provide a number of geopolitical benefits including strengthened relationships with our global trading partners while demonstrating our commitment to free trade. We risk those relationships – and our own credibility – by continuing to restrict the export of crude oil."
The paper examines multiple macroeconomic studies, the most recent of which was released by IHS last month. IHS estimated that lifting the export ban would create as many as 859,000 jobs and increase GDP as much as $170 million by the year 2030. The reports all reach the same unanimous conclusion: lifting the crude oil export ban will create jobs, boost domestic investment and gross domestic product (GDP), narrow our international trade deficit, and put downward pressure on fuel prices. The paper also touches on the significant political and diplomatic benefits to the nation should the crude oil export restrictions be removed.
"While many countries use their energy resources to exert strength, we can export ours to promote peace while enjoying the domestic benefits of economic growth and job creation," Dr. Thorning said. "We have been absent from the global energy stage for too long and now is the time for lawmakers to take action so that the US can take on a leading role."
Download a copy of the paper here.