Reports of a U.S. economic slowdown have added a real sense of urgency to major free-trade initiatives, ranging from President Obama’s signature 12-nation Trans-Pacific Partnership to boosting exports of domestic crude oil and natural gas.
Policymakers have a hugely important task facing them at this pivotal moment. They must find a way to reignite growth and sustain the economic recovery. One surefire way to do that is to expand trade with an increasingly global economy and spur further job creation. In fact, according to a recent Department of Commerce study, exports have contributed more to the growth of the U.S. economy during the current recovery than in previous recoveries and was responsible for 30 percent of gross domestic product growth over the past five years.
Applying the same free-trade logic to our still prodigious domestic energy output promises to unleash substantial economic growth and job creation for years to come. In fact, there’s so much U.S. crude oil available now that it sells for about $10 a barrel less than it does in the rest of the world. The White House and Congress should speed the trade policies needed to make the most of the vast untapped potential of U.S. liquefied natural gas (LNG) and crude oil while the nation still has a commanding lead in global energy markets. Opening up export markets for energy, and building the necessary port infrastructure, will also bring billions of dollars in new investment back into the oil and gas industry.
Back in September, the Brookings Institution and NERA Economic Consulting concluded that easing decades-old restrictions on U.S. crude oil exports would lead to higher domestic production, lower gasoline prices and new jobs. “After 40 years of perceived oil scarcity, the United States is in a position to help maximize its own energy and economic security by applying the same principles to free trade in energy that it applies to other goods,” Brookings and NERA wrote. “By lifting the ban on crude oil exports, the United States also will help mitigate oil price volatility while alleviating the negative impacts of future global oil supply disruptions.”
Lifting the crude oil ban, according to a study by energy consultants IHS, would add between $86 billion to $170 billion in additional annual domestic income and the creation of between 394,000 and 859,000 new jobs on average annually. The benefits would extend well beyond the energy sector. IHS found that only 10 percent of the jobs would be created in actual oil production, while 30 percent would be in the industry supply chain and 60 percent would come from the broader economy.
Likewise, if policymakers can find a way to break the regulatory logjam on LNG exports, the benefits will be sizeable. Earlier this year, the White House Council of Economic Advisers released its annual report to the president, which highlighted the significant role natural gas exports will play in delivering economic and environmental benefits. The report noted that “expanded natural gas exports would generate more jobs, incentivize increased domestic production, strengthen U.S. geopolitical security, promote a cleaner environment at home and abroad, and help American manufacturers maintain a healthy competitive cost advantage in natural gas.”
The political drive to change our energy policies is gaining momentum on Capitol Hill. Earlier this year, Sens. John Barrasso (R-Wyo.) and Martin Heinrich (D-N.M.) introduced a bipartisan bill to expedite LNG exports. And Senate Energy and Natural Resources Chairwoman Lisa Murkowski (R-Alaska) recently announced that she would be introducing legislation to ease the crude export ban. She has long taken a leading role on this issue, working hard to harness support from her fellow lawmakers.
With U.S. economic growth stalling, now is the time for decisive action. The United States is a bona fide energy superpower, among the world’s top producers of crude oil and natural gas. The energy surge has allowed domestic producers to invest, innovate and expand. More than ever, we need policies to drive more growth and align with the new realities of the global energy market.
Bloomfield is president and CEO of the Washington-based American Council for Capital Formation.