President Obama’s domestic policies are incoherent, just like his Syria strategy. In recent weeks he has threatened to veto legislation, now passed by the House, to lift the ban on oil exports. This, from a president who is pressing Congress to approve a sweeping trade pact -- the Trans Pacific Partnership -- by extolling the virtues of free trade. And, a president keen to allow Iran to increase its oil exports. There is no sensible objection to removing an embargo that never served any real purpose, and which is today costing the country jobs. None but the usual from this White House – pure politics.
President Obama knows that removing the ban on oil exports, imposed in 1975 when the Arab oil embargo caused prices to skyrocket, would have virtually no impact on the price Americans pay for gasoline or heating oil. The government’s Energy Information Agency reports that if anything, removing the embargo, which impedes the ability of U.S. refiners to most efficiently match the feedstock they buy with the products they produce, might cause the price at the pump to tick down.
Related: 5 Reasons Oil Prices Are Moving Higher
Obama’s objection to lifting the ban does not reflect concern for U.S. consumers, but is instead driven by disdain for our oil and gas industry and his conviction that solar and wind power are more acceptable power sources in the 21st century. Explaining his objection to the House measure, the White House said that Congress should instead “be focusing its efforts on supporting our transition to a low-carbon economy.” Just as he cannot comprehend that Vladimir Putin might cling to power-grabbing practices that in Obama’s mind are so “last century,” so he cannot grasp that oil and gas are still the underpinnings of our economy – and will be for some time. He also fails to see that exporting natural gas might reduce coal burning in some parts of the world, actually benefiting the environment.
Contrary to every expectation, U.S. oil production has increased from just over 5 million barrels a day in 2008 to nearly 9 million barrels a day last year, thanks mainly to fracking. Our country has been the biggest single source of new oil and gas production in the world, and has benefited greatly.
Now, lower oil prices have driven U.S. oil production, which had been climbing, to drop about half a million barrels a day since June. The rig count is declining; only 848 rigs are currently drilling for oil and gas, down from 1,931 last year. Lifting the export ban will not stem the fall, but it might help U.S. producers find more markets and stabilize production.
Producers of light crude and condensates face a potential glut. Unless they see expanded export opportunities, they may restrict further drilling. The Commerce Department has allowed piecemeal exports of those light crudes, but industry investment would flow from the greater certainty of lifting the export ban.
Related: Bush to Call for Lifting Ban on Crude Oil Exports
At least 150,000 oilfield workers have lost their jobs thanks to the price slump. That doesn’t include related jobs in companies that manufacture drill bits and other oilfield hardware. The Obama White House has not celebrated the surge in oilfield hiring over the past several years, but it has been one of the bright lights among our slow-growth gloom.
Investor Business Daily points out that the oil and gas boom has produced millions of jobs, while our inexpensive energy has attracted sizeable new foreign investment. “Because of low-cost energy abundance, 100 factories are set to come on line by 2017. When all are up and running, another $300 billion will be pumped into GDP and 1 million more jobs created.” From Forbes magazine, “During the 24 month period from July 2009 through June of 2011, Texas created 49 percent of all new jobs created in the United States, and the vast majority of those jobs were either directly or indirectly the result of the state’s oil and natural gas boom….”
Obama is joined by fellow Democrats resistant to lifting the export ban. Their sound bites play well on TV but reveal willful ignorance of how the energy markets work. Kathy Castor, Democrat from Florida warns that sales of U.S. oil to foreign customers will raise prices as the pump and “ultimately benefit China and other economic rivals.” For the record, one of the great advantages the U.S. holds today is much greater energy self-sufficiency and much lower power costs than China. And, for both countries, prices are set globally, by supply and demand.
Related: Oil Pares Early Gains on Bearish World Markets Outlook
Many Americans do not know what an energy revolution has taken place in their own country, because President Obama has done everything imaginable to impede and obscure a truly startling reversal of a decades-long decline in our production. No one thought it was possible.
This earlier pessimism fed the liberal enthusiasm for alternative energy, and Mr. Obama was in the vanguard of those who welcomed the demise of our oil and gas industries. They foresaw a necessary shift to solar and wind energy, which would make the higher cost of those alternatives palatable. Imagine their discomfort when it turned out that no such displacement was required – that oil and gas production, almost miraculously, had revived.
Not only revived, but, in some types of oil not compatible with our refining industry, outpaced our domestic needs. That is the situation today.
At a conference hosted by The Brookings Institute, none other than former Obama advisor Larry Summers argued the merits of removing the ban on oil exports, saying the decision “is easy…The merits are as clear as the merits with respect to any significant public policy issue that I have ever encountered. And it is an important test of the efficacy of the functioning of our democracy whether within the next nine months we will get to that correct solution."
President Obama may fail that test.
