This article was published by The McAlvany Intelligence Advisor on Monday, August 17, 2015:
Daniel Yergin
Just when one thinks the “establishment” has it in for the United States, along comes not one, not two, but three official utterances from three of its mouthpieces that make complete sense.
First, in May, 2013, Zeke Hausfather, writing in Yale Climate Connections, published by Yale’s School of Forestry and Environmental Studies, explored in detail why, despite increasing production of oil thanks to the fracking revolution, those nasty horrible CO2 emissions have actually gone down! In the five years between 2008 and 2013, they dropped an astonishing 12 percent, and for at least one very good reason:
A close examination of energy use in different sectors suggests that the transition from coal to natural gas for electricity generation has probably been the single largest contributor to the decline.
In other words, as the price of natural gas has dropped, it has made the case for conversion from coal ever more attractive. In this case, more energy development means less CO2, not more.
Then, in July of that same year, Blake Clayton, a fellow for energy and national security at the Council on Foreign Relations (CFR), built the case for repeal of the ban on exporting crude oil that was enacted during the 1973 oil crisis. Sounding like a disciple of Ludwig von Mises, Clayton wrote:
Removing all proscriptions on crude oil exports … will strengthen the U.S. economy and promote the development of the country’s energy sector….
Were the ban overturned today, crude exports would immediately rise by several billion dollars a year … likely surpassing five hundred thousand barrels per day by 2017.
Clayton said that energy companies ought to be allowed to make profits:
Letting drillers reap extra profits from selling crude oil overseas … would provide greater incentives for drilling, stimulating new supply.
It would also encourage investment in oil and gas production in the United States rather than abroad.
He said there was no reason not to, completely ignoring protestations from the environmental green movement:
Without compelling reasons for continuing to restrict crude exports, and given the potential benefits, Congress should liberalize the crude oil export regime.
But wait! The greenies, especially the hard-left Oil Change International (OCI), which has the temerity on its website to declare that all oil ought to be left in the ground, are giving their compelling reasons:
In order to play its part in meeting global climate goals, it is imperative that the United States maintains the ban on crude oil exports and does everything that it can to decrease, rather than increase, the global pool of fossil fuel reserves that are [being] exploited.
OCI is no doubt referring to the long-abandoned 1990 Kyoto Protocol, which would have mandated CO2 emissions to be seven percent below those in 1990. But the fracking revolution and its explosion in production and consequent reduction in price has led emissions down to levels not seen since 1996, and they’re headed even lower. Without mandates, the fracking revolution is accomplishing what the greenies wanted governments to mandate.
And then, along came the Washington Post, one of the establishment’s more reliably compliant mouthpieces, in January, 2014, when it asked rhetorically: “U.S. oil exports have been banned for 40 years. Is it Time for that to Change?” After exploring both sides of the issue, WaPo admitted that it was time for Congress to “revisit the ban.”
Enter the Commerce Department. Following the editorial from the Post, it found a “loophole” in the original law that allowed it to grant small concessions to producers wanting to sell ultralight crude to refineries in Asia and Europe. It even explained how those producers could continue to ship crude without having to come back to momma for permission each time.
It expanded that loophole on Friday, allowing Pemex, Mexico’s national oil company, to “exchange” its heavy crude for equal quantities of American light crude.
This, no doubt, delighted Japan, South Korea, and Poland, which have long sought another supplier than Russia to quench their thirst. Besides, American crude is selling between $6 and $20 a barrel less than crude on the global markets.
Friday’s decision by Commerce also delighted a couple of Texas representatives, Will Hurd and Henry Cueller, who issued this:
The American energy renaissance that flourished in Texas due to Eagle Ford, Permian Basin, and Barnett shale exploration will continue to strengthen because of this decision.
It also caused Daniel Yergin (pictured above), author of The Prize: The Epic Quest for Oil, Money and Power, and The Quest: Energy, Security and the Remaking of the Modern World, to agree: “It’s pretty clear where things are headed. This ban becomes more and more awkward and ill-fitting. It doesn’t fit reality.”
The soundness of these establishment annunciations is unequivocal. There is an unmet demand for America’s crude abroad. Without the ban, both producers and consumers would benefit. This would encourage entrepreneurs in the oil patch to expand the exploration activities, which no doubt would result in the discovery of more reserves, bring prices of energy – both oil and natural gas – down even further.
Since energy is the oxygen of the modern industrial state, reducing its cost would make it more efficient, allowing it to drive ever higher the standard of living of those enjoying its benefits.
What about the greenies? If they were really interested in cleaning the air, they would get in line and press Congress to repeal the ban post-haste. Alas, their agenda is different.
But when Congress returns from recess, one of the first issues on the agenda will be banning the ban. It couldn’t happen too soon. Estimates are that without the ban the energy industry would add another $15 billion to the gross domestic product within two years.
Sources:
Wall Street Journal: U.S. Loosens Longtime Ban on Oil Exports
Council on Foreign Relations: The Case for Allowing U.S. Crude Oil Exports
Wall Street Journal: New Oil Shipment Shows Cracks in U.S. Export Ban
Washington Post: U.S. oil exports have been banned for 40 years. Is it time for that to change?
Denver Post: U.S. loosens ban on oil exports, backing trade with Mexico
Russia Today: US lifts 40-year ban on oil exports
Reuters: U.S. approves landmark crude oil export swaps with Mexico
Yale Climate Connections: What’s Behind the Good News Declines in U.S. CO2 Emissions?
Website of Oil Change International
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