Energy Exports Support American Security

• By lifting sanctions on Iranian oil exports, the administration will allow that country to nearly double its exports.

• Last week, President Obama and Hillary Clinton signaled their support for maintaining the ban when they dismissed House legislation to repeal it.

• America can ratchet up its geopolitical leverage and supercharge its economic prosperity by lifting its crude oil export ban.

President Obama and Hillary Clinton continue to hold back America by banning crude oil exports. President Obama’s press secretary dismissed a House bill to repeal the ban as something the White House would “clearly” not support because it is “essentially the domain of the Commerce Department.” Hillary Clinton suggested that policymakers should only consider relaxing the ban as part of a deal that includes “concessions from the oil and gas industry.” Allowing crude oil exports would empower America’s allies, undermine our adversaries, and increase our geopolitical leverage. It would support jobs, lower gasoline prices, and generate economic growth. These are goals that leaders should be promoting, not casting aside or downplaying as merely negotiable.

America’s Geopolitical Advantage

America’s crude oil is one of our most important geopolitical assets. It can lower the price of oil by adding barrels to global supply, reducing the revenues of oil-dependent regimes like Russia and Iran. That undercuts their ability to finance destabilizing military programs and terrorist groups. It also allows the U.S. and other countries to impose sanctions on hostile regimes by providing substitute oil for the barrels taken offline. Allowing U.S. oil exports would immediately ratchet up America’s geopolitical leverage.

The Obama administration’s nuclear deal with Iran, combined with its reluctance to repeal the oil export ban, demonstrates an inexplicable willingness to forfeit this leverage. By lifting sanctions on Iranian oil exports, the administration will allow that country to nearly double its exports. At the same time, the administration is keeping in place sanctions on American oil exports. Currently, U.S. producers are able to export approximately 500,000 barrels per day, mostly to Canada. Without the export ban, U.S. energy producers could export another 1.6 million barrels per day.

The Iranian regime depends on oil export revenues to fund its military ambitions. With sanctions in place, the regime’s energy revenue dropped by 47 percent in 2013, and by another 10 percent in 2014. By lifting sanctions, the administration will enable Iran to recapture much of that lost revenue and to reassert itself on the world stage.

This is particularly bad news for Israel, which Iran’s supreme leader recently threatened “will not see (the end) of these 25 years.” Two weeks ago, on the 14th anniversary of the September 11 terrorist attacks, the White House seemed to acknowledge this. The Obama administration announced its intention to offer Israel more military aid to bolster its defenses.

The administration should not stop at military aid. It should also offer Israel the opportunity to import American oil. According to one recent study, Israel has trouble importing oil from many neighboring countries because they do not recognize the state of Israel. That left Russia as its largest source of crude oil. The study added: “More recently, Iraqi Kurdistan, since gaining some control of their crude production, has taken over the leading role. The opportunity to obtain crude oil supply from the U.S. would be a major benefit for Israel’s security of supply and provide further strengthening of the economic ties between the two countries.”

Israel is not our only ally that would benefit from American oil. A June report by Senate Energy and Natural Resources Committee Chairman Murkowski concluded: “Many U.S. allies and trading partners are interested in purchasing American oil to diversify away from Russia, Iran, and other problematic sources. Allowing such shipments would send a powerful signal of support and reliability at a time of heightened geopolitical tensions in much of the world. The mere option to purchase U.S. oil would enhance the energy security of countries such as Poland, Belgium, the Netherlands, India, Japan, and South Korea, even if physical shipments did not occur.” Poland gets 96 percent of its oil from Russia; Belgium gets 60 percent from Russia and Saudi Arabia; the Netherlands get 31 percent from Russia; India gets 69 percent from the Middle East; Japan gets 75 percent from Russia and the Middle East; and South Korea gets 78 percent from the Middle East.

America’s Economic Prosperity

There is near universal agreement that increased crude oil exports would benefit the American economy. The Brookings Institution noted in a September 2014 report that “[b]enefits are greatest if the U.S. lifts the ban in 2015 for all types of crude” and emphasized that in every scenario the group modeled, “there are positive gains for U.S. households.” The Government Accountability Office concurred in an October 2014 report: “Removing export restrictions is expected to increase the size of the economy, with implications for employment, investment, public revenue, and trade.” Columbia University added in its own January 2015 report: “Allowing exports would make the U.S. more resilient, not less, to supply disruptions elsewhere in the world. Greater integration into global markets would make U.S. oil supply more responsive to international market developments, mitigating the impact on American consumers and the U.S. economy of production losses in other countries.”

These studies and others predict that adding barrels of American crude oil to global supplies could ultimately reduce domestic gasoline prices – anywhere from one to 13 cents per gallon. A price cut at the pump operates as a tax cut for hard-working American families, immediately boosting their spending power and stimulating activity throughout the economy.

In one study, the expected oil price decreases were estimated to save American consumers an average of $5.8 billion per year from 2015 to 2035. These savings would drive an estimated increase of $38.1 billion in U.S. GDP in 2020, led by increases in oil and gas production and consumer spending. This economic activity would support an additional 300,000 jobs in 2020. Federal, state, and local tax receipts attributable to the GDP increase could reach $13.5 billion in 2020. Lifting the crude oil export ban also has been estimated to increase household income by an additional $3,000 per household in 2025.

Bipartisan Oil Export Ban Reform

A steady stream of former Obama administration officials have expressed their support for lifting the crude oil export ban. Larry Summers, former economic policy adviser to Presidents Obama and Clinton, stated in a September 2014 speech at Brookings that the “merits are as clear as the merits with respect to any significant public policy issue that I have encountered.” Leon Panetta, former secretary of defense and director of the Central Intelligence Agency, wrote in the Wall Street Journal on May 20: “Too often foreign-policy debates in America focus on issues such as how much military power should be deployed to the Middle East, whether the U.S. should provide arms to the Ukrainians, or what tougher economic sanctions should be imposed on Iran. Ignored is a powerful, nonlethal tool: America’s abundance of oil and natural gas. The U.S. remains the great arsenal of democracy. It should also be the great arsenal of energy.”

Despite the overwhelming evidence that lifting the ban would help America, the Obama administration continues to reject that option. This brings to mind another energy project with geopolitical and economic benefits that Democrats have buried in the federal bureaucracy and killed with endless negotiations. The Keystone XL pipeline’s cross-border permit application was filed seven years ago, as of last Saturday. It still languishes in negotiations at the State Department without any hint as to when the Obama administration will decide its fate. Americans should not have to wait nearly as long for Washington to lift the oil export ban to help secure America’s economic and national security.