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04:36 GMT, January 8, 2014US oil companies have asked for an end to the country’s oil export ban that has been in force for four decades, ever since the Arab oil embargo of 1973.
The US still consumes much more oil than it is able to pump, but a dramatic increase in the production of light, sweet crude – a type of oil that foreign refiners seek – has resulted in growing calls for the restrictions to be lifted.
However, many people still remember the economic havoc that oil shortages played on the US economy, which led to the export ban (unless a company has a special license).
Most industry experts believe that the US today cannot continue living with a legislation that was relevant to a completely different world of forty years ago, but a sizable minority still wonder whether lifting restrictions might undermine the country’s energy security.
Would lifting oil export ban affect markets?
The majority of economists believe lifting the oil export ban would have virtually no effect on prices. America already exports gasoline and diesel at record amounts (the restriction is on crude oil).
Experts in Texas and North Dakota argue that energy security would improve if the oil export ban were done away with – they say it would encourage greater domestic production.
Those in favor of ending the ban include the American Petroleum Institute, and several oil and gas companies, such as ConocoPhillips and Exxon Mobil.
In an event hosted by the Energy Security Initiative at the Brookings Institution on January 7th, Senator Lisa Murkowski (R-Alaska), a ranking member of the Senate Committee on Energy and Natural Resources, said the prohibition on crude oil and condensate exports must end. Murkowski added that the export ban is “not beneficial to the American people.”
The US is producing more energy today than ever before, Murkowski explained, yet the regulations regarding energy trade were written “long ago for a now bygone world in which scarcity, not abundance, was the prevailing mindset.”
Murkowski describes the regulatory system for energy exports as “antiquated and at times I would suggest even absurd … we surely can do better than this. American-made energy is the safest and most environmentally responsible energy on earth.”
New Jersey Sen. Robert Menendez said “Crude oil that is produced in the U.S. should be used to lower prices here at home, not sent to the other side of the world.”
Many environmentalists worry that ending the oil export ban may harm the environment. If companies can export crude they will find higher prices, resulting in more money for oil explorations at home. More money for oil exploration at home could mean more damage to the environment.
Market Business News has received comments from economists outside the USA who say that America should lift all trade bans, including the oil one, as well as doing away with farm subsidies if it wants to show the world it seriously believes in the free market. How can a country spend decades trying to persuade Mexico to open up its oil industry to foreign companies when its own oil industry has elements of protectionism?