China / Energy / Politics

Reducing the Trade Deficit with China: Repealing the Crude Oil Export Ban

With much of the current energy conversation surrounding the Keystone XL Pipeline, many Americans have forgotten, or may not even know, about another energy issue that might just be more important: the crude oil export ban.

Since the 1970’s, the U.S. government has prohibited U.S. oil producers to export crude oil internationally in order to ensure that the U.S. would be able to access oil in case of an international shortage or another OPEC embargo. There are certain exceptions to this rule, but companies must obtain a permit for every export which costs them thousands of dollars and creates additional bureaucratic red tape. Most of the permits that are obtained are used to export crude oil to Canada.

Two weeks ago, I had the pleasure of discussing the crude oil export ban with Fred Upton, Chairman of the House Committee on Energy and Commerce, on whether the Committee was planning on reversing the outdated ban. While he agreed that the ban should be reversed, the congressman expressed that the Committee would not take up the legislation just yet because there was not enough popular support for it.

But there should be.

Continuing this ban is pointless for a variety of reasons. The circumstances under which we enacted the ban are no longer relevant. In 1973, a large portion of our oil imports came from Arab members of OPEC. While we still import oil from the Persian Gulf, we no longer rely as heavily on Middle Eastern oil. Currently, the majority of petroleum imports come from Canada, at 32 percent. Comparatively, 13 percent comes from Saudi Arabia. While this is still a large number, our political relationship with Saudi Arabia is extremely stable as evidenced by President Obama’s recent visit to pay respect to the passing of the late Saudi King Abdullah.

This visit was extremely significant because the President does not normally visit foreign countries to offer condolences; rather, he sends the Vice President or Secretary of State. Additionally, numerous former U.S. leaders, including Secretaries of State James Baker and Condoleezza Rice, Senator John McCain and multiple administration officials, joined Obama for the visit, demonstrating the long bipartisan support for the Kingdom. The possibility of a Saudi embargo is almost impossible, as it is more likely that the Kingdom will suffer more due to the loss of U.S. military aid and arms sales, which amounts to over $80 billion since 1946 including a $6.8 billion sale in 2013.

Additionally, our own supply of crude oil and other forms of energy are more than enough to support American energy needs. This past July, the U.S. passed Saudi Arabia as being the largest oil producer in the world. The U.S. holds a vast amount of energy reserves, amounting to 36.5 billion barrels of oil and 354 trillion cubic feet of natural gas. This is the largest amount of reserves in U.S. history, and analysts believe that these reserves will grow an additional 50 percent in the next few years. Furthermore, the recent bipartisan push to adopt an “all of the above” energy strategy by both Congress and President Obama will only add to this increase.

So how can Americans take the most advantage of this abundance in energy resources? The answer is actually quite simple: repeal the crude oil export ban and begin exporting oil to China.

We currently run a trade deficit with China that amounts to more than $342.65 billion. This deficit also extends to crude oil, as we import 200,000 more barrels of oil than we export to China per year.

China is the world’s largest net importer of energy. In 2014, China imported around 5.6 million barrels of oil per day. It seems as if the U.S. is the only major oil-producing nation not taking advantage of China’s growing demand for crude oil. Saudi Arabia, Russia and even Angola are exporting massive quantities of oil to China.

The crude oil export ban is one of the main reasons that this crude oil trade deficit exists. Not only could we get rid of our crude oil trade deficit, but we could also start to decrease our overall trade deficit with China and reduce the national debt.

Not only is this ban no longer relevant, but it is actually a detriment to our national economy. Show Congressman Upton that there is national support for repealing the crude oil export ban because your financial stability depends on it.

Advertisements

What do you think?

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s