A fact that many people do not know is that the US has not exported crude oil since 1975, when Congress banned the act. The reason back then was that domestic reserves where becoming depleted due to the 1973 Arab embargo. But that was over 40 years ago. So why is the ban still in effect?
This question is currently being debated within the US oil industry. Because of better technology and the discovery of more locations to drill, oil production in the United States has climbed to 8 million barrels a day, which is the highest level of production reached since 1988. This huge increase it what has sparked oil producers to calling for a lift in the ban.
There are those who wish to keep the ban on oil exports intact, however. Companies that purchase the crude oil, such as refineries and manufacturers, want the ban to continue as they benefit from lower prices of domestic oil. Because of low domestic oil prices, refineries and chemical companies are then able to sell and export the refined oil for large profits. If the ban is lifted, they argue, this competitive advantage disappears. There is the added possibility that refineries and other manufacturers that handle crude oil could lose jobs as foreign companies will be able to handle the crude on their own. An argument also exists that, by lifting the ban, gasoline prices could also increase.
Despite the critics, allowing free trade to take place has its benefits. The American Petroleum Institute has stated that ending the export ban could create 300,000 jobs while also reducing the trade deficit by $22 billion by 2020. Without export restrictions, US oil production is also predicted to increase. Another issue that critics of lifting the ban argue is that the infrastructure to handle and transport crude oil across the country does not yet exist. However the key word is “yet”. Should the ban be terminated, that infrastructure will have to be built. This means increased investments and jobs to create and maintain the infrastructure.
Just like in most things pertaining to politics and the economy, there is no definitive right or wrong answer. However, it is interesting to note that, despite have differing opinions on most aspects of economics, economists nearly all agree that free trade is a good thing.