The Obama administration has been talking up the benefits of exports this week. On Tuesday, Commerce Secretary Penny Pritzker noted that nearly one-third of the country’s economic growth since the middle of 2009 has been fueled by exports. The president, meanwhile, claimed that more American jobs currently are supported by exports than at any point in the last 20 years.
This focus on trade is welcome.
Economists have long known that increased levels of international commerce benefit consumers and grow economies, so it’s heartening to see the administration profess a desire to expand American exports through the National Export Initiative. The Commerce Department refers to NEI as “the most ambitious trade agenda in a generation.”
A push for even freer trade
An obvious step would be to encourage exports of energy products like liquefied natural gas (LNG) and crude oil, domestic supplies of which are abundant and growing. Yet various federal government policies currently limit or prohibit their export.
It’s worth pointing out that exports of finished petroleum products like gasoline, diesel, and jet fuel – which are not proscribed by federal law – have increased significantly during the period cited by Sec. Pritzker.
These exports have contributed to the good-news trade story the administration is touting. It makes no sense, then, that crude oil exports and natural gas exports are subject to severe regulatory limitations, when they could also add to the nation’s much-needed economic recovery. Continuing these policies threatens to slow domestic economic activity as well discourage future energy production.
A shift in thinking?
Fortunately, Washington may be considering the merits of extending the benefits of free trade to all energy products.
Two weeks ago the House Energy & Commerce Committee advanced legislation that would require the Department of Energy to issue a decision on applications for LNG export permits in an expedited fashion. A similar bill awaits action in the Senate. I’ve explained many times why government delays on issuing these decisions are unwise.
Meanwhile in Seoul on Tuesday, Energy Secretary Ernest Moniz announced that his colleagues are coming around to the idea of opening up the policy discussion to whether to lift the export embargo on crude oil.
“The issue of crude oil exports is under consideration,” Sec. Moniz said. “A driver for this consideration is that the nature of the oil we’re producing may not be well-matched to our current refinery capacity.”
He added, “There are a lot of issues in the energy space that deserve some new analysis and examination in the context of what is now an energy world that is no longer like the 1970s.”
Sec. Moniz took great pains to make clear where final authority for lifting the ban lies: the U.S. Department of Commerce (just as his agency has authority for moving LNG permit applications).
Let’s hope both Sec. Pritzker and Sec. Moniz take actions to match the administration’s strong rhetoric on trade, and that they do so quickly so that the energy sector can do even more to help American economic growth.