America’s Once-in-a-Generation Opportunity Starts With Exports

The export ban should be lifted, according to Tessa Sandstrom, communications manager for the North Dakota Petroleum Council. There are many reasons why it matters to the Bakken, she says.
By Tessa Sandstrom | January 21, 2015

“Do not pass Go. Do not collect $200.”

This is the dreaded phrase on the “Go to Jail Card” that you’ve likely drawn, or at least heard of, when playing the game of Monopoly. Drawing this card is an all-around bummer. You lose a chance at scooping up valuable property before others do, you don’t get to collect $200 that you might need to purchase property, and it increases the chance that you lose the game. But at least it’s just a game. Right?

Wrong. What many people probably don’t realize is that we’re in a real-life game similar to Monopoly, but this one is focused on the global oil market, not property. And, it just so happens that we’re stuck holding the “Do not pass Go” card.

In this game of Monopoly, for a very long time, the U.S. was equivalent to those cheap purple properties – Baltic Avenue and Mediterranean Avenue. Our reserves were believed to be dwindling and the Middle East held the coveted Boardwalk and Park Place properties – the reserves on which our nation depended for several decades for which we’ve dearly paid. This era of energy scarcity resulted in a ban on U.S. crude oil exports to help support domestic price controls and respond to the 1973 oil embargo.

Today, we’ve rolled the die and our odds are looking better. Innovation and technology have unlocked the prime Bakken and Eagleford “properties” that have made us a real player in energy development. As a result, our net imports have declined 19 percent between 2012 and 2013, and domestic oil production could more than double by the mid-2030s bringing those net imports even lower.

What prevents us from being a real player in the game, however, is that despite this abundance, we are still beholden to the mentality of scarcity and the export ban. Oil is traded on a global market, but it is one in which we cannot participate. Instead, this is a market that OPEC, which includes countries that would seek to do us harm, virtually monopolizes. Today, we are seeing the impact this monopoly has on our nation, and many of these impacts are beginning to be felt right here at home in North Dakota as oil prices fall.

The era of scarcity is still rather fresh in our minds, and many of us are content with staying in “jail” and allowing others to play the game. “Keep our oil here!” is a common mantra among those who support this position. This position, however, is one that does not realize the logistical impossibilities of “keeping our oil here.”

Many U.S. refineries are built, or were converted decades ago, to process heavy, sulfurous crude oils that are imported from Canada, Mexico and the Middle East. The crude that comes from shale plays like the Bakken and Eagleford is light, sweet and very valuable. Despite this value, it is often marketed at a discount because we do not have the refineries here to process this new abundance of oil. For this reason, the U.S. may never truly be energy “independent.”

But we can be independent from those aforementioned countries that would seek to do us harm. The good news is the refineries that are equipped to handle light, sweet crude are among our friends and allies in Europe. The bad news is our export ban prevents them from purchasing our oil, and instead forces them to get it from countries that would also seek to do them harm. Herein lies the first benefit of U.S. oil exports―geopolitical influence. Our ability to compete with OPEC in this global market would take away the organization’s ability to manipulate oil prices, which would lend greater stability to the commodity.

There are other benefits―namely jobs, economic growth and lower energy prices―that would come from lifting the export ban. As we’ve seen in North Dakota, an increase in production has translated into billions of dollars in economic growth and tens of thousands of jobs. Lifting the ban so this resource could get the markets that need light, sweet crude could mean an additional 300,000 additional jobs by 2020 according to a study by ICF International. IHS estimates that increased production from ending the ban could create 1 million jobs for our nation, a quarter of which would be in non-producing states. Additionally, increased production means increased capital investments approaching $1 trillion over the next 15 years, a tremendous boon to the U.S. economy.

These benefits go beyond state and federal coffers. In addition to increased wages and income through new job and career opportunities, savings would be passed down to consumers. Thanks to domestic production, we’ve seen gas prices plummet to their lowest point in years, and this would only continue if the export ban were lifted. Numerous studies by respected researchers and think-tanks like IHS, Resources for the Future, and Center for a New American Security have found that lifting the ban could further translate into lower gas prices for consumers. IHS says the savings could add up to $265 billion over 15 years.

As Jack Gerard, the American Petroleum Institute president and CEO, so simply summed up in his 2015 State of American Energy Address, “We have a once-in-generation opportunity to show the world how energy abundance can be used as a positive force rather than as a tool to harm or to control other nations as some still use their energy abundance.”

That opportunity starts with lifting the export ban. A failure to do so will leave us sitting on the sidelines unable to pass “Go.”

If you support lifting the export ban, contact your U.S. Senators and Congressmen today and urge them to support American energy exports.

Author: Tessa Sandstrom
Communications Manager,
North Dakota Petroleum Council