Today, North Dakota is the second largest oil-producing state in the nation, having reached 1.1 million barrels of daily production in April 2014. This is up from just 100,000 barrels per day in 2007.
This is thanks to technologies like horizontal drilling and hydraulic fracturing that have unlocked the reserved trapped in the Bakken. The resulting surge in oil production has made North Dakota equivalent to the 18th largest oil producing country.
This rapid production combined with that of Texas, has led the surge in U.S. oil production. In fact, since 2008, U.S. oil production has increased by 73 percent to become the biggest oil producer in the world.
This unprecedented increase in production, however, has also caused a glut in the crude oil market. Rather than cut back production to meet demand, OPEC nations have continued production, causing oil prices to fall and creating a glut of light, sweet crude in the U.S. This, in turn, has slowed oil production in North Dakota.
This glut is caused in part because U.S. refineries are better equipped to handle the heavy sour crude that had to be imported to meet our energy needs and also because of a ban on exports that was instated in 1975. Today, energy leaders are urging decision makers to lift that ban in order to reinvigorate domestic oil production, create new jobs, and bring energy prices down for consumers.
All major studies agree that repealing the ban on crude oil exports would create jobs, grow our economy, help decrease gasoline prices, and improve our energy security.
The Domestic Energy Producers Alliance reports that lifting the ban will add 1 percent to gross domestic product growth, drastically reducing the U.S. trade deficit and putting Americans back to work. A recent study by IHS found that job creation from lifting the ban would average almost 400,000 jobs in the first year and peak in 2018 at nearly 1 million new jobs. The Brookings Institute concluded U.S. households will benefit from lifting the export ban through higher incomes and wages and lower gasoline prices.
Economists and experts also agree that lifting the export ban will put downward pressure on U.S. gasoline prices. In a report titled “What Drives U.S. Gasoline Prices?” the U.S. Energy Information Administration (EIA) found that our gasoline prices are tied to the international price of oil, also known as Brent. Allowing U.S. oil exports would add to global supply and put downward pressure on international prices, which are precisely what determines our price at the pump. A study by Columbia University found that lifting the ban could reduce our gasoline prices by up to 12 cents per gallon. Other studies say American consumers could save up to $5.8 billion annually each year from 2015 to 2035.
Not only would prices come down, but allowing the export of U.S. crude oil would help eliminate swings in energy prices. According to the Center for New American Security, new U.S. oil supplies have already helped cap price spikes caused by global supply disruptions, which has moderated oil prices for consumers.
While the U.S. has more light, sweet crude than it can refine, our nation’s allies have refineries that are in dire need of it. In the same way that the U.S. has become less reliant on hostile countries for energy, so would the country’s allies because they could depend on American oil for energy, rather than countries that would seek to do them harm.
Thanks to domestic production, the U.S. has a reliable supply energy supply, which has helped increase our nation’s security. Allowing export of U.S. crude would strengthen the nation’s geopolitical standing, enhance its trading relationships, and enhance its national security, while lending the same stability to allied nations.