Groundbreaking advances in the oil and gas industry, such as horizontal drilling and hydraulic fracturing, have allowed the United States to produce more crude oil today than ever before. With the dramatic increase in crude production, industry leaders are calling for a lift on the 40-year ban on exporting crude oil.
At its inception, the export ban helped the U.S. overcome a volatile global market. Now with an overabundance of crude oil stored in tanks, lifting the export ban has created a unique opportunity that could brand the U.S. as a major crude oil exporter. Many industry leaders, including Jack Gerard, CEO of the American Petroleum Institute (API), as well as lawmakers view the ban as a barrier to the U.S. advancing in the global crude market. In fact, various studies have found exporting crude oil to be critical for the U.S. to experience economic growth, oil exploration and production and the creation of countless American jobs. Furthermore, lifting the ban will increase free and fair trade, allowing the U.S. to aid our allies and reduce their fear of shortages and price increases due to the turmoil in the Middle East.
Although industry leaders and lawmakers continue to discuss the benefits exporting crude oil could have on the U.S., the public perception remains blurred. Consumers worry exporting crude oil will allow oil producers to take advantage of high global prices thus leading to higher costs at the pumps. The concern for a potential rise in gas prices has some in the political realm hesitant to join the coalition to retract the export ban, in fear the public will blame them if the price of gas skyrockets, resulting in political retribution.
While the public perception is undefined, the oil and gas industry will continue to make a play to have the export ban lifted. Similar to any other commodity in the U.S., crude oil should once again be traded on the global market. The four-decade export ban is a past era in the U.S. and one that does not accurately reflect the boost in today’s domestic oil production.
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This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.