Phil Castle, The Business Times
Lifting what it describes as an outdated ban on crude oil exports from the United States could bolster energy production and in turn the economy in resource-rich Colorado, according to a coalition of business and economic development leaders in the state.
“We believe this could be a real growth driver for this key industry,” said Jonathan Ekstrom, a spokesman for Vital for Colorado.
There are other potential benefits as well to lifting the crude oil ban, among them increased energy security for the United States and its allies and decreased fuel costs, Ekstrom said.
The U.S. House of Representatives voted 261-159 on Oct. 9 to approve legilsation lifting the ban. The bill heads to the Senate, where its prospects are uncertain. President Barack Obama has threatened to veto the measure.
Ekstrom said the circumstances under which the crude oil export ban was instituted in the midst of the Arab oil embargo and declining domestic oil production in the 1970s have changed.
That’s expecially true given the recent development of hydraulic fracturing, horizontal drilling and other techniques that’ve turned the United States into the leading oil and natural gas producer in the world, he said.
Over the last decade, crude oil imports as a proportion of U.S. consumption have dropped from 60 percent to 30 percent, which most imports coming from Canada and Mexico, Ekstrom said.
Even as the ban on crude oil has remained in place for more than 40 years, there’s no ban on refined petroleum products, he added.
More than 90 economic development groups, businesses and elected officials from across Colorado have signed on in supporting efforts to end the ban on crude oil exports, Ekstrom said, including the Colorado Association of Commerce and Industry, Colorado Bankers Association, Colorado Contractors Association and Colorado Farm Bureau.
The list of supporters also includes the Grand Junction Economic Partnership and West Slope Colorado Oil and Gas Association as well as State Rep. Yeulin Willett and State Sen. Ray Scott, both Republicans from Grand Junction.
Vital for Colorado was established to support and promote energy production in Colorado as well as a rational and competitive regulatory environment that allows the energy industry to thrive, Ekstrom said. Given the potential benefits to the energy industry and economy in Colorado, it makes sense for the group to push to end the ban on crude oil exports. “The oil export issue seemed like a good fit for us.”
Ekstrom said a study conducted by IHS based in Englewood assessed the effects of lifting the crude oil export ban on the U.S. economy. According to the study, some of benefits would include:
- An average increase in domestic oil production of 1.2 million barrels of day along with a decrease in net petroleum imports of between 1 million and 2 million barrels a day.
- An additional $746 billion in economic investment.
- An average annual increase in gross domestic product, the broad measure of goods and services produced in the country, of $73 billion.
- An increase in government revenue of $1.3 trillion between 2016 and 2030.
- An overall savings of about $265 billion for consumers, which equates to as much as $391 a year in annual household savings.
Ekstrom said the study also estimated the increased crude oil supply would lower gasoline prices by an annual average of 8 cents a gallon.
While the IHS study didn’t assess the effects of lifting the crude oil export ban on the Colorado economy, the state would benefit because of the prominent role of energy development and the energy industry in the state, Ekstrom said.
He said a study conducted by the University of Colorado in 2012 found that energy development accounted for $9.3 billion in production value and $1.6 billion in public revenues while directly employing more than 50,000 people at an average annual wage of more than $74,000.
Tracee Bentley, executive director of the Colorado Petroleum Council, estimated Colorado could gain nearly 5,000 jobs as a result of lifting the crude oil export ban.
Ekstrom said energy development in Colorado and elsewhere in the United States has slowed because of low oil and natural gas prices. But lifting the crude oil export ban could help to “jump-start” the industry by creating new markets for domestic production.
Lifting the export ban also could help U.S. allies overseas, Ekstrom said, particularly those dependent on imports from such countries as Russian and Iran.