The pressure to end the ban on U.S. oil exports is getting more intense by the day as Iran readies to enter the global oil market. It has been forty years since the self-imposed oil ban was placed unto the United States, deeming it a matter of national interest to protect the country’s domestic source of oil and gas.
An Outdated Ban
But many people believe that the ban is outdated and no longer serves its purpose, especially if the United States can lift its ban on Iran and not on its own country. In efforts to recover from the 1970s oil embargo, The U.S. implemented the ban to keep the oil in place. However, many experts also agree that with the surplus of oil the country has and being the only country in the world that does not trade oil internationally, it is economically beneficial to open its doors to the international oil market.
This is the same sentiment expressed by PACE or Producers for American Crude Oil Exports, saying that trading oil internationally will help attract more revenue but would also lower the price of oil and gas at the pump for the local consumers.
It doesn’t make sense in today’s age of U.S. energy abundance. Repealing the ban will also improve our balance of trade and strengthen our geopolitical standing in the world,” the PACE spokesperson further emphasized.
Further fueling the intensity to end the ban is the prospect that the country will now lift its export ban on Iran. There seems to an irony to the situation here. Senator Lisa Murkowski says in a report that “lifting sanctions against Iran without also lifting the ban on U.S. exports will allow Iran to compete in markets largely inaccessible to American companies.”
9 Million Barrels and Counting
The production of oil has now reached 9 million barrels per day yet U.S. crude oil is $10 cheaper per barrel when compared to those in the global market. It can be remembered that OPEC has waged a silent oil price war against the US in efforts to maintain global market share. OPEC refused to lower down production and therefore flooded the market with more oil than what is needed. It was a desperate move to drive American oil operators, companies and businessmen out of business, resulting to drops in rig counts and employment rate.
One of the countries that would benefit from lifting the export ban would be Canada. Although US has been exporting oil to Canada for the country’s domestic use, the energy and environment board director Vincent Lauerman of Canada thinks that “the whole system could run in a much more efficient manner in North America if we allow that light sweet crude to be exported elsewhere.”
The Ongoing Issue
Whether or not the oil export ban is going to be lifted will seem to be an ongoing spectacle in the White House. In the words of Sen. Murkowski, “this is something that is simply in the best interest of the United States, in terms of both our economic strength and our national security.”
Removing the oil export ban will affect numerous sectors. As investor and oil consumer, it pays to pay attention to changes in legislations regarding oil policies and stay updated for developments that may impact your investments.