by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Heritage Foundation economist Nicolas Loris explains in a Daily Signal column how the American economy would benefit from decreased federal government interference in the energy market.
Put simply, free trade is a fundamental component in creating prosperity and promoting human well-being. When markets are open to more producers and consumers, competition provides people with more choices and better products at lower prices.
Opening markets to both imports and exports fosters innovation as companies face more competition and meet challenges to retain or expand their market share. The result is innovative ideas, higher-quality products at competitive prices and an improving standard of living.
President Obama recognizes as much. When speaking about benefits of trade a few years back in Berlin, he said, “Trade has been a cornerstone of our growth and global development. But we will not be able to sustain this growth if it favors the few, and not the many.”
Yet that’s exactly what our policies restricting energy exports are doing. Because America has a longstanding ban on crude oil exports and an onerous process in approving liquefied natural gas (LNG) facilities, the government is limiting opportunities for the many to protect the few special interests who stand to benefit from keeping the energy locked for domestic use.
In a recent economic report, the Dallas Federal Reserve Bank explained how the crude oil export ban may help a few refiners but end up hurting us all:
“Consumers also may be negatively affected if the export ban remains in effect. Given that the prices of gasoline and diesel are determined in a world market, consumers see few, if any, of the benefits that flow to U.S. refiners. To the extent that the ban discourages drilling, this limits the potential supply of oil available to be processed into gasoline and diesel, placing upward pressure on retail fuel prices.”
The benefits to freely trading energy aren’t just economic. Providing more energy choices to both producers and consumers worldwide will bolster U.S. national security by increasing global energy supplies. It will also reduce the ability of any one nation to use its control of energy resources to threaten U.S. interests.
Plus Loris doesn’t even mention the likely benefits of moving ahead with approval of the Keystone XL pipeline.