Author: Richard Stern, Vice President of the Plymouth Institute
Plymouth Institute for Free Enterprise
TOPLINE: Facing surging diesel prices, Congressional leaders are considering replicating the failed energy policies of the 1970s by banning diesel exports.
BACKGROUND: The history of the 1975-2015 crude oil export ban tells us that banning American diesel exports will not reduce fuel prices for American families or farmers. Instead, it will stunt American industry and benefit Russia and China. The 1975 ban was a disastrous political maneuver with long ranging consequences on the American economy. Conservatives should know better than to repeat history’s mistakes and embrace statist economic policy.
Believe it or not - Europe’s oil was cheaper during the ban: From 1987 to 2010, during the export ban and before the Fracking Revolution, American crude was 6% more expensive than European traded crude.
American crude only became cheaper after the Fracking Revolution.
Figure 1
The 1975 Ban Stunted American Industry
Production fell and imports surged: The ban stunted our own oil and gas production as U.S. crude output fell from 8.4 million barrels a day in 1975 to 5.0 million in 2008, while crude imports increased 140% between 1975 and 2008.
Output surged after the ban was lifted: Since the ban was lifted, U.S. crude output has risen 46% from 9.4 million to 13.7 million barrels a day and our exports of crude and petroleum products have more than doubled
Figure 2
Fuel Export Bans Benefit Foreign Adversaries
Oil is always priced globally: A U.S. export ban doesn’t take oil off the global market, it simply redirects where foreign oil goes, and both global and domestic prices stayed largely unchanged.
Russia and China benefit most from a U.S. Export ban: The 1975 ban opened the door for OPEC and Russia to take American producers’ market share, and a new ban would create a similar windfall for Russia and China today.
A new ban would force our European allies to choose between freezing this winter or buying Russian diesel and funding Putin’s war effort.
BOTTOM LINE: The 1975 crude oil export ban didn’t help Americans; it stunted our own industry and aided our adversaries. Forty years was enough of that experiment. Reducing fuel prices requires leasing more lands for oil and gas extraction and cutting the red tape holding back America’s drillers and refiners.
