A Sanction By Any Other Name…
April 2, 2015
Years of sanctions imposed on the sale and export of crude oil have wreaked havoc on Iran’s economy and helped force them to the international bargaining table to discuss their nuclear program. What has gone unreported in all the recent coverage is the link to our economy here at home. The US is suffering the effects of crippling economic sanctions as well.
This journalistic oversight isn’t intentional; it’s a problem of vocabulary.
Americans are familiar with the term, “sanction”, as an oft-used instrument in the US foreign policy toolbox. Recently, Secretary of State John Kerry has spent a good deal of time in negotiations with his international and Iranian counterparts over the future of Iran’s nuclear program and, consequently, the existing international sanctions prohibiting them from exporting crude oil.
According to news accounts as this issue goes to press, Iran could be rewarded for good behavior with the right to export one million barrels of crude oil per day, a move that would help to rebuild an Iranian economy that has been utterly destroyed by the current ban on exports. Our sanctions have worked. We have proof positive that preventing an oil producing-country from exporting oil will damage its economy.
Ironically, or maybe not, the Obama administration supports the export of Iranian oil and not the export of American oil. But we don’t call it a sanction on our turf. It’s “policy.”
Officially the Energy Policy and Conservation Act of 1975 amounted to self-imposed sanctions. At the time, the Arab Oil Embargo of the early 1970s reflected a dire situation. US crude oil production was in decline and tensions in the Middle East were on the rise.
But, times have clearly changed, and so has the state of US crude oil production.
The United States is now the largest global producer of crude oil, surpassing both Russia and Saudi Arabia. New technologies have enabled US producers to access shale oil once thought unusable, fundamentally changing the energy landscape in the process. Domestic crude oil production is now responsible for almost ten million jobs nationwide, with more than 500,000 right here in the Permian Basin. Further, a recent Senate hearing received testimony that lifting the ban could result in a GDP increase of as much as 1%, which would translate to another one million high-paying US jobs – no small feat in today’s economy.
In recent months we have seen report after report highlight the benefits of lifting the export ban and warning of the dangers of leaving it in place. Columbia University, Rice University, the Congressional Budget Office, the Energy Information Agency, noted economists like Larry Summers and Alan Greenspan, and many others, have all weighed in on this outdated policy. The consensus is clear that lifting the ban will lower prices at the pump for consumers, create jobs, and grow our economy.
This mountain of evidence begs the obvious question – how can we use an economic weapon like sanctions against Iran to such devastating effect, but not see the harm a similar policy is causing right here at home?
In my role as President of the Permian Basin Petroleum Association, I represent more than one thousand mostly small, family owned businesses. Our members work hard to support their families and grow their businesses. Despite bringing America closer to energy independence that at any time in the last century – producers here in the Permian and around the country are being punished with denial of access to the free market. They are being sanctioned. As the national conversation focuses on lifting sanctions abroad, let’s take a minute to deal with this outdated policy sanctioning energy production here at home. The time has come for Washington to end the ban on crude oil exports and empower our energy renaissance, rather than hamper it.