Crude oil may be our most strategic weapon

I was surfing through the news channels this morning and noticed a summer energy forecast which said that gas prices were getting ready to rise. But unlike recent years, the “high” this summer is forecast to still be well below $3 per gallon for much of the country. It’s a very pleasant change from prices which hit four or even five dollars in some places, and perhaps it will make summer vacation plans a bit more manageable for some folks.

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While we are enjoying these relaxed costs, it’s worth remember just how we got to this point. America is now a global leader in pretty much every form of energy, including gas and oil production. We supplied more than 70% of our own resources last year, and of the remaining amount, we imported more than half of that from Canada and Mexico. That’s not just good for our wallets… it’s also a pleasant relief from the stress of knowing that our supply lines were dependent upon a variety of countries where Islamic terrorists are setting people people on fire and selling young girls off as sex slaves.

Unfortunately, many of our closest allies are not enjoying such benefits and still have to deal with the same bad actors to secure their energy needs. Our ability to help them in this situation is severely limited by a crude oil export ban which we’ve been hanging on to since I was a child, and this policy deserves a fresh look. Leone Panetta and Stephen Hadley have an editorial at the Wall Street Journal this week which puts the global implications of lifting the ban in the spotlight.

The United States faces a startling array of global security threats, demanding national resolve and the resolve of our closest allies in Europe and Asia. Iran’s moves to become a regional hegemon, Russia’s aggression in Ukraine, and conflicts driven by Islamic terrorism throughout the Middle East and North Africa are a few of the challenges calling for steadfast commitment to American democratic principles and military readiness. The pathway to achieving U.S. goals also can be economic—as simple as ensuring that allies and friends have access to secure supplies of energy.

Blocking access to these supplies is the ban on exporting U.S. crude oil that was enacted, along with domestic price controls, after the 1973 Arab oil embargo. The price controls ended in 1981 but the export ban lives on, though America is awash in oil.

The U.S. has broken free of its dependence on energy from unstable sources. Only 27% of the petroleum consumed here last year was imported, the lowest level in 30 years. Nearly half of those imports came from Canada and Mexico. But our friends and allies, particularly in Europe, do not enjoy the same degree of independence. The moment has come for the U.S. to deploy its oil and gas in support of its security interests around the world.

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The more than 40 year old crude oil export ban is no longer serving its original purpose. And, as the authors point out, it is currently causing nearly the opposite effect as was originally intended. Continuing it at this point is not only leading to a sequence of diminishing returns, but leaving important benefits – both foreign and domestic – on the table.

Yes, we all like lower energy costs, but gas prices can only go so low. At a certain point, production is throttled no matter how many resources are available because there are certain costs associated with extraction and refinement which simply can’t go any lower. When supply beats out demand by too much, additional production produces a loss rather than a profit. Selling our excess oil and gas supplies to our allies is one way to keep the supply chain moving.

But it does much more than that. The less our friends across the oceans have to depend on nations like Saudi Arabia or Iran for their energy needs, the more flexibility they have to act in a positive fashion on the world stage. Panetta talks at length about the containment effect this would have on Iran – and it’s an excellent example – but the same can be said of Vladimir Putin. Russia maintains a chokehold on much of Europe through control of the pipelines and Russia’s rich oil supplies. And for reasons of infrastructure, their pipelines are pretty much the only game in town. Imagine what a bit of spine stiffening could do for some of these countries if they had another reliable option.

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The downside to loosening the crude oil export ban is negligible. The potential benefits are staggering and far reaching. It’s time for both Congress the presidential candidates to take up this question in a serious fashion.

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