Imagine this: US iron miners, thanks to revolutionary technology that can extract iron from once-useless rock, double their production in 5 years, creating hundreds of billions of dollars of wealth, contributing to steel production for billions of people around the world, and making America a world leader in iron once again.
The production explosion is so big that domestic steel mills can’t keep up, but that needn’t be a problem. There are plenty of international steel mills that will buy US iron and make it into steel that we or anyone else in the world can buy—at ever-lower prices, thanks to the growing supply of iron and steel on the market.
What if, instead of liberating this beneficent combination of domestic production and international trade, the government xenophobically insisted on banning the export of iron—“crude steel”—even though every other industry, including steelmakers, is (properly) allowed to sell the products it produces to buyers around the world?
Here’s what would happen.
Deprived of an international market, iron makers would have to sell their product at artificially low prices to only domestic steelmakers, who would make an artificially inflated profit. Iron makers would lower their production because iron would be less profitable, and there would be mass layoffs where there could have been mass job-creation. With less iron in the world, there would be less steel in the world and higher prices for everyone. The US’s opportunity to be the world leader in iron would be threatened.
Fortunately, there is no proposal to ban “crude steel” sales. But appallingly, there is a four-decade official policy of banning the international sale of an even more vital commodity: crude oil, or petroleum.
In the wake of the 1973 Energy Crisis, during which gasoline prices skyrocketed, Congress passed several laws that authorized the President to forbid producers from selling their oil overseas, in order to somehow protect us from increases in oil prices. Some people believe that policy was plausible in the 1970s. I believe it wasn’t: the keys to energy security are pro-development policies, lack of price controls, and international trade with as many allies as possible. But in any case, there is no intellectually serious argument as to why it makes sense to forbid Americans from selling the overabundance of oil that they produce, but allow them to sell refined oil (gasoline and other products).
Not if your concern is human well-being, anyway.
Unfortunately, support for the crude oil export ban is driven by two anti-American energy policies: energy manipulation and energy deprivation.
Energy manipulation is the government dictating when and whether we are free to produce, consume, and transport energy. This inevitably means that the government picks some companies to be winners and some to be losers—making consumers the biggest losers of all.
Some oil refiners and unions are supporting the oil export ban, not out of principle, but out of hope for short-term gain: if oil producers can’t sell to international buyers, they can negotiate bigger discounts—even if that destroys productivity and raises prices for everyone in the long-run.
We should reject these opportunists advocating energy manipulation.
The rest of the support for the crude oil export ban is driven by advocates of energy deprivation: the policy of opposing most or all sources of cheap, plentiful, reliable energy, including hydrocarbons (fossil fuels: coal, oil, natural gas), nuclear power, and hydroelectric power. Most Green groups fall into this category.
Their basic argument is revealing: ending the crude oil export ban will lead to more, cheaper oil for billions around the world—and that is why it is bad. For example, the anti-fossil fuel, anti-nuclear Center for American Progress published a report arguing that we need to ban oil exports because energy liberation would lead to a “worst case” additional 3.3 million barrels—139 million gallons of oil—per day, enough for 46 millionAmericans to get to work, to take family vacations, to make life-saving medical devices, to power the diesel farm equipment that feeds billions.
It is basic economics that liberating crude oil exports means more oil (and oil-based materials such as plastics) at lower prices for more people. And the fact is that the more oil and fossil fuels we use—though they do have (wildly exaggerated) risks and side effect—the better and safer life gets for billions of people, including (non-millionaire-income) Americans.
So the question is, are we going to ruin an amazing opportunity by energy manipulation or energy deprivation? Or are we going to do the right thing, the moral thing, and create energy abundance and a better world through energy liberation?
Liberating oil exports is just one of many energy liberation opportunities in my Energy Liberation Plan. For more information about the plan, click here.