Robert Bennett: A little perspective on an upcoming energy surplus

Published: Monday, March 31 2014 12:17 a.m. MDT

Russian President Vladimir Putin speaks at a Security Council meeting in the Kremlin in Moscow, Russia, Friday, March 28, 2014.

Alexei Nikolsky, Associated Press

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During my Senate career, all of the discussion about energy was dominated by the issue of its shortage; America needed more energy than it could produce. How to best make up the difference? The debate began in the 1970s as energy prices skyrocketed in response to the oil embargo imposed on the West by OPEC — a cartel consisting of countries that were infuriated by our support for Israel. We were rudely awakened to the fact that we were no longer energy self-sufficient and had become heavily dependent on imported oil.

The oil shock also set off a wealth transfer of unprecedented scale. Energy costs in America, Europe and Japan rose dramatically while billions and ultimately trillions of dollars poured into the bank accounts of nations that possessed huge reservoirs of oil, most of them in the Middle East. This raised national security concerns. What did it mean for us to be forced to rely on governments that could be hostile or unstable — or both — for our energy?

We prohibited the exportation of American crude oil on the grounds that we needed to keep every drop of it here at home in order to hold imports at the lowest possible level. Some exceptions have had to be made, but only a few. President Reagan justified the export of gasoline and diesel fuel — both refined products — by saying it would “benefit the balance of payments, take advantage of transportation efficiencies and allow the U.S. to respond quickly to its potential international responsibilities.”

Presidents Bush and Clinton opened the door a little wider, with Clinton saying, “Permitting this oil to move freely in international commerce will contribute to economic growth, reduce dependence on imported oil, and create new jobs for American workers.” However, like Reagan, they were reacting to specific sets of circumstances rather than changing America’s overall posture of restricting energy exports.

Now, everything has changed.

Discoveries of vast amounts of American oil, first in North Dakota and then in Texas, combined with new technology in drilling and recovery, have made America the equivalent of Saudi Arabia when it comes to developable reserves. The Bakken field in North Dakota is now producing a million barrels a day and Eagle Ford in Texas is expected to do so relatively soon. Along with discoveries of vast amounts of natural gas, discussions about energy have shifted from “How do we deal with the existing shortage?” to “What do we do with the coming surplus?”

The Russian invasion of Crimea has turned this into a very hot current topic. Last week, hearings were held on the question of exporting American energy in the Senate Energy Committee, the House Energy and Power Subcommittee and the House Foreign Affairs Committee. Each focused on how to use exports as a way to put pressure on Russia, whose economy is overwhelmingly dependent on high oil prices to keep itself going.

The level of interest, involvement and understanding shown by members of both parties at these hearings makes it clear that they all want to know more about the impact that changes in our energy export policy could bring. It is entirely possible that it will not be too long before we see ships loaded with a variety of forms of energy — liquefied natural gas as well as certain types of crude oil — leaving from, rather than arriving in, American ports.

Given the beneficial impact this could have on our economy, our relations with countries like Iran and our general standing in the world, we might look back on Crimea and say, “Putin did us a favor.”

Robert Bennett, former U.S. senator from Utah, is a part-time teacher, researcher and lecturer at the University of Utah’s Hinckley Institute of Politics.

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