Compelling Economics Support Oil Exports
Something we hear frequently (and too often from people who should know better), is that as long as the United States is an oil importer it shouldn’t export domestic crude. It sounds logical and certainly makes for a good headline. But the idea ignores reality and sound economic analysis.
A quick skim of government data on U.S. trade shows that goods imported into the United States are often goods that also are exported from the United States. The fact is that oil is traded globally, and the ebbs and flows of global supply affect us here in the U.S. Bruce Everett, who teaches oil market economics at Tufts University, explained in a recent article for Politico:
… it’s certainly true that the US will still require imported oil for the foreseeable future to meet our needs. But the implication here is that exporting US crude oil would increase our import needs and therefore undermine national security. And that’s not how the oil market works. The US has an open economy, and American consumers pay world prices for oil – just as they do for wheat, corn, copper, gold and other internationally traded commodities. Crude oil is sold in a single, integrated global market. If the world oil price spikes, the US will suffer, along with everyone else, to the extent we rely on the global market for imports. But exporting some domestically produced oil would not affect this equation.
Energy isolationism isn’t in the United States’ best interest – economically or from a security standpoint. While some argue that shutting in U.S. crude oil is better for America, that kind of faulty thinking ignores the way free markets work – and can work to America’s benefit if we lift the ban on exporting domestic crude.