Pressure reportedly is mounting on Capitol Hill to lift a four-decade ban on exporting U.S. crude oil.
This notion gives me pause. I’m not totally against it. It surely, though, does raise a fundamental economic question: If supply-and-demand policy regulates the price consumers pay for a product, would exporting oil overseas reduce the supply here at home and, thus, mean we pay more for what we purchase?
I watched the price of gasoline drop twice Saturday while I was working. The price of regular unleaded gasoline is now around $3.07 per gallon in Amarillo.
Then this morning I read in the Wall Street Journal that prices might be coming down even more. And this comes as the pressure builds to allow U.S. exports of oil. Why? Because we have so much of it now being produced here at home, thanks to the enormous shale oil reserves being developed in places such as North Dakota and Montana — not to mention the production that’s occurring in West Texas and Oklahoma.
Some Republicans want to lift the ban enacted in the 1970s when oil was relatively scarce. We had been through those oil embargoes slapped on us by rogue Middle East nations. The price of fossil fuel products has gone nowhere but up ever since … until now.
The price is coming down, thanks to a lot of factors: better motor vehicle fuel efficiency; increased development of alternative energy sources, which means less reliance on fossil fuels to generate electricity.
All of this has contributed to a glut of oil supply in the United States.
Do we want to draw down that supply when Americans might start to see some serious relief as they fill up their motor vehicles with fuel?
Supply goes up, prices go down. Isn’t that what we want? I need to think some more about this idea.