Oil exports would harm U.S. energy independence
By Leo W. Gerard Multinational oil conglomerates, with allegiance to no country, want to make a couple of extra bucks a barrel by selling American crude on the international market. And that makes sense for corporations that couldn't care less about American national security or energy independence.
By Leo W. Gerard
Multinational oil conglomerates, with allegiance to no country, want to make a couple of extra bucks a barrel by selling American crude on the international market. And that makes sense for corporations that couldn't care less about American national security or energy independence.
What doesn't make sense is American politicians groveling to meet oil corporation demands. There's too much at stake.
Yet that's what happened recently when Republicans on the Senate energy committee voted, at the behest of the oil giants, to lift a 40-year-old ban on exporting American crude. If the measure becomes law, America could find itself dependent on the likes of bellicose Russia and hostile Arab nations for oil. That would threaten national security.
A Republican, President Gerald Ford, banned exports in 1975 in an attempt to move America toward energy independence after the turmoil caused by the 1973 OPEC oil embargo. In retaliation for America's support of Israel during the Yom Kippur War, the OPEC nations refused to sell crude to the United States. That triggered massive fuel shortages, price spikes, long lines at the pumps, and economic havoc.
At that time, America imported 27 percent of its crude. Now, it imports 44 percent of what is refined in the United States, including at two Philadelphia area refineries that employ more than 1,000 and support thousands more jobs. As a result of hydraulic fracturing, America recently became the world's top oil producer. But it still doesn't pull enough crude out of the ground to meet its needs. The United States imports more oil, by far, than any nation in the world.
And yet oil corporations propose making America more dependent on oil imports because for every barrel they would export, another barrel would have to be imported. And it's likely to be imported as gasoline, threatening American refining jobs, including those in Philadelphia.
This would not be good for America. And the oil companies know it.
The 1975 law permits extractors to export if they get a license from the Bureau of Industry and Security. The agency will grant permission if it determines that exports are "consistent with the national interest."
Oil corporations want a federal law to circumvent licensing because they know that exporting crude is not, in fact, in the national interest.
It is only in their interest. American crude is selling for about $5 less per barrel than foreign crude on the world market. The oil companies want those few extra bucks a barrel.
And they justify it by contending that shipping American crude overseas will stimulate drilling for hydraulic fracturing.
That this makes no sense doesn't stop them. The pace of new drilling for hydraulic fracking slowed because the price of a barrel of crude on the global market fell by half over the past year, from $110 to just over $50.
OPEC is behind this price decline. It deliberately inundated the world market with crude to cut prices. That discouraged new drilling for hydraulic fracturing because the process is relatively expensive. And that's exactly what OPEC wanted.
Exporting American crude would further flood the world market. That is likely to further lower the price, not raise it to the point where profit margins encourage new hydraulic fracturing.
Sen. Angus King (I., Maine) called the proposal to permit oil exports the "No Fossil Fuel Left Behind Act." And that's not a popular idea with Americans, a large majority of whom, including 61 percent of Republicans, told Hart Research Associates in a poll late last year that they oppose exporting oil.
Despite that, oil industry front men say exports should be allowed because what's good for Iran is good for America. One of them, Donald J. Boudreaux, of the industry-supported Mercatus Center, wrote, "If unfettered commerce in oil is fine for Iran, then why not for America?"
The oil industry thinks Iran, a country that supports terrorism, represses its citizens, and imprisons journalists, should be a role model for America. According to oil corporations, Iran, which possesses among the largest oil reserves in the world, should lead the way for the United States, which may be producing lots of oil right now but has a fraction of Iran's oil resources.
Basically, the oil industry says America should act like a rogue nation as long as that's in the financial interest of oil executives, and U.S. energy independence and national security be damned.