When the Arab oil embargo began in 1973, the halcyon days of cheap gasoline in the United States were over forever. The embargo was initiated by what was known as OAPEC, or the Organization of Arab Petroleum Exporting Countries, as a response to the U.S. involvement in the Yom Kippur War between Israel and Egypt and Syria. Prices immediately spiked at gas stations, and long lines formed as frustrated drivers often waited for hours to fill up.
In response to the Arab embargo, the Congress enacted a ban on U.S. exports after price shocks started to take a huge toll on not only the U.S. economy, but the psyche of the U.S. citizens. Inflation was heating up in the 1970s, and big spikes in energy prices just made things worse.
After more than 40 long years, it appears that maybe the tables are getting ready to turn. A new report from energy research group IHS makes the case that reinstating U.S. oil exports could have numerous positive benefits, not only for domestic oil producers, but for the unemployed looking for jobs and for consumers who are currently facing gasoline costs of more than $4 a gallon in some places across the country.
The IHS report argues that if U.S. lawmakers reverse the 40-year-old ban, government revenue as a result of reinstating oil exports would increase a massive $1.3 trillion between 2016 and 2030. Jobs in crude oil and exploration, and oil field services, during that period would be expected to rise by 394,000 per year and crest at a gigantic 964,000 in 2018. The report also says that the increase in global supply could actually lower gas prices by up to eight cents per gallon.
With Russia’s aggressive expansion into the Crimea and continuing uncertainty over Ukraine, gasoline supplies to Europe are a concern. In addition, the continued demand from emerging markets is adding to the overall consumption and supply issues across the globe. The huge domestic increase in production due to hydraulic fracturing and horizontal drilling have trumped long-standing supply concerns and is positioning the United States to become the biggest oil-producing nation in the world, surpassing both Saudi Arabia and Russia.
One thing that is important to note, the IHS research report was paid for by Exxon Mobil Corp. (NYSE: XOM), Chevron Corp. (NYSE: CVX) and ConocoPhillips (NYSE: COP). Even with big oil behind the research, this is an issue that has come up already for politicians looking for ways to add jobs to the economy and revenue to state and national government coffers. While no action is expected in front of this year’s midterm elections, you can bet that it will be an issue that gets strong consideration in the near future.