From immigration to tax reform, it is natural for public policy to evolve and adapt in response to the current environment and today’s challenges. This month, Congress answered the need for change in its year-end omnibus deal by including language lifting the restrictions on crude oil exports from the United States. By acknowledging the seismic shift in our nation’s energy landscape – from scarcity to abundance - we now have the potential and the means to define the future of energy in America.
The heightened scrutiny surrounding this policy in recent years has stemmed from drastic changes to the structure of our country’s energy portfolio since the ban’s enactment in the 1970s. Today, the U.S. is producing more than nine million barrels of crude oil per day and inventories are higher than they have been in 80 years. The days of oil shortages and foreign energy embargos are behind us, and accessing the global marketplace will keep the energy industry investing in the U.S. economy, strengthening our infrastructure, and improving technological advancements.
In fact, the energy industry is generating more revenue for this country than ever before. A recent report released by the Progressive Policy Institute (PPI) showed six out of the top 25 companies that invested in the U.S. are energy companies. In all, those six companies, “had a total domestic capital expenditure of $43.6 billion, which is an increase of nine percent from last year.” While the U.S. economy most greatly benefits from the direct financial investments that the energy industry has produced to date, removing the final prohibition to trading oil on the global markets will produce positive externalities. These benefits will manifest as innovative enhancements to safety and security for domestic infrastructure, which will ultimately increase efficiency and generate energy savings.
These energy and infrastructure investments will deliver real, tangible benefits. One of the greatest challenges that the nation currently faces is the need to improve our aging energy infrastructure. Whether energy is transported by pipeline, rail, or waterborne craft, the private sector has the means to enhance our outdated system. Infrastructure improvements and expansion take time and are costly. IHS Global consulting has estimated that the oil and natural gas industry will invest almost $900 billion in infrastructure over the next 12 years. This investment is dependent on a legislative framework and regulatory climate that is conducive to a growing energy sector. Removing the ban on crude oil exports is one tool in a whole toolbox of policies that will contribute to a strong and vibrant cycle of investment and growth.
Lifting the ban also broadens the opportunity for thousands of new jobs and will generate millions of dollars in new income for American families. One report prepared by IHS looked not only at the direct industry jobs that would be created as a result of crude oil exports, but also the thousands of peripheral jobs created annually throughout the industry’s vast supply chain. Overall, the study found nearly 859,000 new jobs would be created nationwide every year as a result of revising this energy policy for this century. The U.S. economy will prosper as the energy sector is bolstered through construction, manufacturing, and services jobs.
In our rapidly changing world, with increasingly global markets for technology and energy, the pace of innovation can force the hand of policy makers. After 40 years, the U.S. has finally amended its energy policy to reflect the reality of our abundant resources and international standing. This new energy policy will allow America to retake its place as a leader on the global energy stage.
Mr. McCown is a former government executive, attorney, and public policy expert. To learn more, visit him at brighammccown.com or follow @BAMcCown.
