We don’t tend to think of Iran’s theocratic dictatorship as a hotbed of freedom, to say the very least. But if the Obama administration’s Iran deal goes through, Iran will have at least one important freedom that America does not: the ability to export its own oil to world markets.
It’s hard to believe that our nation, currently afloat on an ocean of oil, is saddled with a ban on oil exports established in 1975. A lot of bad and outdated ideas from that era have gone by the wayside. But unlike bell-bottoms and platform shoes, this one’s still with us.
Unfortunately, the legacy of this archaic law continues to harm U.S. consumers with artificially higher prices at the pump, while causing lower prices for U.S. producers and stymieing job creation here at home.
The ban was understandable in its era, considering how the OPEC embargo of 1973 quadrupled oil prices, led to panic at the gas pumps and further fueled the belief that U.S. oil production was in a permanent and irreversible slide. But what a difference 40 years makes in new production technologies, known domestic reserves and, of course, global politics.
Also, consider that most American refineries are set up for the heavier, “sour” oil imports we relied on so heavily before the shale boom. Converting them to handle the lighter crude we’re producing from shale will be a lengthy and very expensive process.
And so, a lot of America’s oil is in storage and sells for significantly less in the U.S. than it would on world markets. Eliminating the export ban would close the price gap between Brent and WTI crude. That’s money this nation is leaving on the table, for no good reason.
It doesn’t have to be this way.
Eliminating export restrictions would provide the oil patch with a major boost — one that would ripple throughout our economy. Naturally, as the nation’s largest oil producer, Texas would benefit greatly. One recent study by ICF International estimated that lifting the ban could create 41,000 Texas jobs and $5.2 billion in additional Texas income by 2020.
The benefits would also be nationwide and IHS has estimated that lifting the ban would generate up to 964,000 additional jobs throughout the U.S. by 2018, and raise disposable income per household by $391. It also noted that a quarter of the additional jobs created would be in states that don’t even produce oil. Similarly, IHS estimates that eliminating the ban would lower gasoline prices by an annual average of 8 cents, saving American motorists $265 billion by 2030.
Maybe the export ban made sense in 1975, but back then so did polyester leisure suits and gigantic shirt collars. I don’t think heavy-handed attempts to distort the market are ever a good idea, and 40 years later we are still paying price.
Eliminate the oil export ban and let the markets work. Let me put it another way: Rather than rushing to ratify the Iranian nuclear deal that allows Iran to export its oil and create jobs there, let’s urge Congress to toss the export ban and put U.S .consumers, workers and businesses at the front of the line.