Congressman Conaway: Time to rethink the crude oil export ban

The following is an editorial by Congressman Mike Conaway:

The past six years have rewritten the story of America from the inside out. Ten years ago, journalists wrote breathless stories about America’s Achilles’ Heel – its addiction to foreign oil.  Today, we recognize that America sits on an ocean of oil, recoverable thanks to the genius and gumption of the men and women of the energy industry – many of whom hail from right here in West Texas.

This dramatic reversal in oil and natural gas production requires that we rethink our national energy policies.  Already, we are moving slowly toward allowing the export of natural gas, and it is important for members to consider finally lifting the crude oil export ban, as well.

The crude oil export ban is a relic of a 1970s energy policy designed to prevent price-controlled US crude from flowing overseas to higher paying customers. While we no longer have the inefficient, interventionist price controls, we have maintained the prohibition on exporting crude. 

A report released by the Government Accountability Office this week which concluded that ending the export ban would both increase oil prices and lower gas prices, sends the clear signal that it time for a change.

For decades, the export ban made little difference, America has long consumed more oil than it could supply for itself. Today however, it makes sense to reexamine this 40-year-old policy. While few analysts expect that the United States will ever produce more crude than it consumes, the unexpected rise in domestic production and the deep discounts that some domestic oil is selling at has shown that at this moment, we cannot efficiently consume all the oil we are producing.

These mismatched markets and imbalanced prices distort producers’ incentives and discourage investment in production. They are the reasons why, as a conservative, I am a strong supporter of open, competitive markets. The export ban is the exact opposite of free markets and free trade.

To be certain, lifting the export ban will cause some uncertainty – it is not possible to change a 40-year-old policy without challenging the status quo that has developed around it. Many market participants have policy concerns that Congress should examine and look to mitigate by pursuing additional free market policies.

On balance though, allowing domestic producers to export crude oil stands to be a boon for our nation. Lifting the ban would not be a one-off, static change to the market; rather it would unlock a cascade of changes, shifting business models and bringing greater flexibility and efficiencies across the entire economy. 

As global oil prices converge, US producers’ economic incentives to increase production will be better aligned with their competitors across the globe. As consumption rises in Africa, India, and China, US producers will see their prices rise, enabling them to expand their production operations domestically. Allowing free trade in crude oil will drive domestic investment in jobs and energy infrastructure.

As a major oil producer, our entry into the global market should also serve to dampen price volatility in America and with our trading partners. As converging prices drive investment in domestic production, the additional supplies that America produces will serve to lessen the world’s reliance on energy from volatile states like Libya, Nigeria, and Iraq.

For almost a century, the Permian Basin has proudly helped to power our nation. Last year, the Basin produced a whopping 1.35 million barrels of crude oil per day, and today accounts for almost 20 percent of total domestic production. It is the most productive producing region in America, thanks in no small part to many of our bold, hardworking, and creative neighbors. Allowing these talented Americans the opportunity to supply a global market place is exactly the kind of energy policy the United States Congress should be pursuing.