The United States must lift an “outdated” ban on oil exports to take full economic and geopolitical advantage of its hydraulic fracturing boom, according to a Harvard Business School study released on Wednesday.
Lifting the 40 year-old ban imposed after the Arab oil embargo and easing restrictions on liquefied natural gas export terminals would add $23 billion to the economy by 2030, create tens of thousands of jobs, and provide the United States with additional clout overseas, the paper said.
“Our energy resources have given the US important new diplomatic tools that can aid allies and counteract the ability of unfriendly countries to use oil and gas access to achieve political aims,” according to the research authored by Harvard Business School Professor Michael Porter and Boston Consulting Group’s David Gee and Gregory Pope.
“Today, the ban on crude exports … is reducing market opportunities for producers and reducing U.S. growth, with no clear offsetting benefits for America or Americans,” said the study, which outlined several steps the country should take to fully benefit from the fracking boom.
The call comes during intensifying debate in Washington on whether to reverse the oil export ban after Republicans introduced bills in both the House and the Senate in recent months. Oil producers eager to ship to markets in Asia and Europe say the ban has led to a glut of U.S. sweet crude that could eventually choke the domestic drilling boom. Some Democrats have been cool to the idea, citing concerns that exports would raise domestic energy prices.
The rise of fracking technology, which involves pumping water, sand and chemicals into a well to extract oil or gas, has helped lift US production of natural gas by 35 percent since 2005 and oil by 45 percent since 2010.
The Harvard paper said fracking now contributes about $430 billion to annual US gross domestic product and supports more than 2.7 million jobs. It called the industry “perhaps the largest single opportunity to change America’s competitiveness.”
It said, however, that the oil industry and regulators needed to work hard to counter weak public support for fracking, mainly by addressing concerns about potential air and water pollution, and the practice’s links to earthquakes.
A report by the US Environmental Protection Agency this month said fracking had not led to widespread pollution of drinking water, but it added that some drilling activities could cause health risks.