Want cheaper gas and economic growth? Lift crude oil exports ban, study says

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For nearly 40 years, there???s a been a ban on exporting crude oil from the United States to other nations in the world.

Now, a just-released study says lifting the ban could boost the U.S. economy between $600 billion to $1.8 trillion and save motorists up to 12 cents a gallon at the  pump.

Researchers for the Energy Security Initiative of the Brookings Institution called the ban ???an anachronism that has long outlived its utility and now threatens to impair, rather than protect, U.S. energy, economic, and national security??? and cites modeling that predicts broad-based economic benefits that include more jobs, better wages and higher gross domestic product if the ban got ditched.

The study from Brookings, which is considered a left-of-center think tank, claims the sooner the ban is lifted, the greater the economic impact.

???What is most important is our finding that in all these modeling scenarios, there are positive gains for U.S. households,??? the analysis said.

For example, the Brookings study says lifting the ban would increase domestic oil production, which would increase gasoline supply. That would lead to a drop of the price of gas. The study estimated a reduction of nine cents per gallon for about five years up to as much as 12 cents a gallon if oil supplies are more abundant.

Furthermore, according to the Brookings modeling done by National Economic Research Associates, lifting the export ban reduces unemployment by 200,000 each year between 2015 and 2020.

???Allowing crude oil exports is in the national interest,??? wrote the study???s authors. ???Our analysis shows a direct correlation between increased U.S. oil production, net benefits to society, and lower gasoline prices.???

Bernard Weinstein, economist and associate director of the Maguire Energy Institute at Southern Methodist University, agrees with the study???s findings.

???It???s not just the oil-producing states that benefit, everybody benefits in the form of lower gasoline prices,??? Weinstein said. ???It holds down power costs and heating costs in other parts of the country.???

U.S. oil production has boomed in recent years, largely due to technological advancements that allow companies to drill ???tight oil??? in places such as the Bakken formation in North Dakota, the Eagle Ford formation in south Texas and the Permian Basin in west Texas and eastern New Mexico.

Lifting the crude oil ban would further boost production in those areas, and that figures to mean more money for the general funds in those states through increased severance tax revenue and royalty payments made by oil companies.

???That goes without question,??? Weinstein said. ???The greater level of production, the more revenue is generated.???

But more production means more use of hydraulic fracturing, commonly known as ???fracking,??? and that???s something environmental groups are dead-set against.

???I think the last thing we need to be talking about is exporting fossil fuels,??? said Jeremy Nichols, climate and energy program director for WildEarth Guardians. ???We???re struggling to try to rein in carbon pollution as a nation ??? The American people want to see action and are concerned about the costs in increased pollution or a failure to reduce carbon pollution effectively. If we???re talking about exporting oil, we???re just talking about burning it somewhere else.???

The Brookings Institution study didn???t address environmental issues and concentrated on the economics of the crude oil ban. ???We do agree these issues need to be recognized, though the impact on global emissions (in comparison to U.S. coal exports) is likely to be negligible,??? the study???s authors said.

???This wasn???t a report based on proffering an energy policy based on climate change,??? Nichols said. ???This was based purely on (national) security. Fair enough, we have security issues. Those don???t trump climate change.???

Other critics, such as Sen. Edward Markey, D-Mass., argue that lifting the ban could lead to higher gas prices and make the United States more dependent on foreign sources of oil.

Last week, the former top Obama economic adviser, Lawrence Summers, cited the Brookings study and came out in full support of getting rid of the crude oil export ban.

???If we wish to have more power and influence in the world, in support of our security interests, and in support of our values,??? Summers said at a presentation at the Brookings Institute, ???and if we wish to have an influence that we pay for with neither blood nor taxes, I do not see a more constructive approach than permitting the export of fossil fuels.???

The ban was first put in place in 1975. In the wake of the Arab oil embargo, Congress passed the Energy Policy and Conservation Act that included a ban on crude oil exports in an effort to avoid price spikes.

But price controls were eliminated in 1981 and opponents of the export ban say that with the energy business now booming in the United States, the time is right for a change.

The crude oil export ban can be lifted either by a sitting president or through congressional action.

While the Brookings study says the economic gains will be felt most strongly the faster the ban is lifted, Weinstein doesn???t think it will happen soon.

???Not this year,??? Weinstein told New Mexico Watchdog in a telephone interview. ???Maybe in 2017, depending on how the midterm elections go and how the (2016) presidential election goes ??? Who knows what the President will do? Right now, he???s not doing anything that???s energy related like the Keystone pipeline. He says the administration won???t authorize any offshore lease sales between now and 2017.???

Click here to read the entire 65-page report from the Brookings Institution, called ???Changing Markets: Economic Opportunities from Lifting the U.S. Ban on Crude Oil Exports.???

Here???s video of Summers calling for the end of the ban:


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