Representatives in both the Texas house and in Washington want to end the 40-year ban on U.S. oil exports, a policy developed in the 70s in response to the wildly fluctuating energy market. However, some elected officials feel that policy is outdated and is slowing America’s economic growth. Considering low oil prices and the price per gallon of gasoline just now reaching more that $2.50 since its precipitous decline last fall, Midland and Odessa could certainly benefit from an expanded oil and gas market.
U.S. Rep. Mike Conaway (R-Midland) with U.S. Rep. Henry Cuellar (D-Laredo) have filed HR 2369, the Energy Supply and Distribution Act, according to the Midland Reporter-Telegram. It’s a bill that would do away with the ban on oil and gas exports. An Alaskan Senator has filed a companion bill that will do the same.
Oil and gas firms pretty much unanimously support the legislation, and a Texas Senate resolution gives a resounding “amen” to the proposed repeal, too.
“Coming on the heels of yesterday’s resolution in the Texas Legislature calling on Congress to lift the ban, I think it’s pretty clear that Texans are united on this issue,” said Ben Shepperd, president of the Permian Basin Petroleum Association, in an email from Austin. “We couldn’t be happier that Congressman Conaway has taken a leadership role in introducing this solid, bi-partisan legislation. Coming on the heels of the Senate companion bill introduced last week, it just illustrates the growing momentum for finally ending this outdated policy.”
It could give the beleaguered Permian Basin a boost economically, and it could also bolster demand for housing in the area, as home sales and rentals are flagging. Still, builders are still putting up rooftops in the region.We have calls out to economists to get their perspective, so stay tuned.
UPDATE: We heard back from the chief economist at the Real Estate Center at Texas A&M University, Mark Dotzour:
“Ending the ban on exports would probably cause the price of Texas oil (West Texas Intermediate) to move higher toward the global price (AKA Brent Crude),” Dotzour said. “Since we can’t export, our ‘local’ price in America is lower because of all the supply we produce. Ending the export ban would not end the ability of OPEC to try to kill the US energy business. If they want to, they can grossly over-produce oil and drive the price as low as they want to.”
So while prices may climb, opening American oil production to the global market does make us more susceptible to a wildly fluctuating market and other outside influences.