Thursday the House approved a bill to boost U.S. energy production, lift a 40-year old ban on crude exports and overall the gaining U.S. electrical grid. The Senate might do the same even with a White House threat to veto the crude export ban bill.
The bill would also be responsible for speeding up natural gas exports and increase the approval process for natural gas pipelines across public land. Not only will this approval process for pipelines across public land be hastened, cross-border projects like the Keystone XL pipeline would also be included in the proposal.
The embargo on U.S. crude export was a reasonable response to a serious crisis in the early 70’s, but these issues have long faded into history. Export supporters have made the point that our light crude oil could fetch a premium price at oversees refineries where they have specialized refineries to process light crude. On the other hand those who oppose repealing the crude export ban state that it would undermine the progress made in renewable and sustainable technologies. Both are valid but there are some misconceptions about the crude export ban that should be cleared up before the White House makes their decision.
One of the public’s biggest concern is that if U.S. crude is able to be exported, gas prices would rise due to a lack of supply. The fact is, rising demand would create incentive for small, medium and large oil producers in America to increase production and continue ramping up drilling efforts. Furthermore, a majority of U.S. oil refineries do not have the ability to efficiently process Americas light crude. Instead the U.S. relies heavily on Canada and Venezuela. Most U.S. refineries were build to process the heavier grade of crude oil and not the light crude that is abundant in America. The manufacturing industry could also benefit greatly from this increase in demand by seeing a spike in machinery and equipment purchases. If production needs to increase this will create more demand for drills, pipe, heavy equipment and other heavy duty machinery which will help stimulate the economy.
Those who oppose lifting the U.S. crude export ban make a very strong argument against lifting the ban. They point out that creating more of a demand for U.S. crude will reduce businesses’ willingness to move away from the harmful fossil fuels. The U.S. has made incredible progress in sustainable and renewable energy in the past few years and the thought of all this effort being lost due to oil companies producing more crude is a valid deterrent for policy makers.
Even with U.S. progress on the renewable energy front, oil is still the dominant energy source for the world. Renewable energy still needs time to mature and become more widespread throughout not only the U.S. but the entire world. If the nations that we are exporting to still rely on coal for their energy production, an influx of cleaner natural gas would be much less harmful to the environment than burning coal. If markets need the crude and U.S. does not supply it, they will find it for themselves from other countries like Russia and those in the Middle East. The nations that are supplying the outside world with crude have an enormous revenue stream with no competition from U.S. businesses.
This is a very complicated decision U.S. policy makers must make. On one hand, the U.S. is passing up an incredible opportunity to export our crude to the rest of the world. But many believe giving oil companies of all sizes the opportunity to export their crude will push back the development of renewable and sustainable energy efforts. Only time will tell if the U.S. export ban will be lifted or kept in place, but either way there will be benefits and serious downsides.