When people talk about the U.S. shale boom making the U.S. “energy independent,” they are indirectly referring to 1973.
40 years ago Wednesday, Arab states cut off exports to the U.S. and curbed overall production. That winter, the U.S. was basically brought to a standstill.
The shock caused, among other things, Congress to ban the export of raw crude stocks in 1975.
We’ve previously discussed why energy independence is largely a myth: the U.S. has spent the past several decades diversifying where it sources its energy. It’s also undesirable, since, in theory, this diversification shields us from oil price shocks.
But he says allowing crude exports would vanquish the ghost of 1973 once and for all.
US energy independence does not ever require the US becomes a net oil-exporting country. But it does mean that a more secure US and global energy system needs freedom to export and import as the market warrants. That means removing barriers to exporting crude oil that have been in place for decades.
Freedom to buy and sell would lower crude and gasoline prices globally. It would reinforce today’s flood of investments into US oil and gas, as one of the only places on the planet largely secure from government intervention.
Given that President Obama has not even allowed the final leg of the Keystone XL Pipeline, which would technically be bringing more crude into the country, to go forward, it’s unlikely the ban will get lifted anytime soon.
But we are already exporting record amounts of oil products, which are not covered by the 1975 bar, and that’s helped narrow our trade deficit.