Since oil was first discovered in Hobbs in 1927, well-paying jobs and the contagious entrepreneurial spirit of the oilfield have created opportunities for thousands of families to reach the middle class and beyond and to realize their versions of the American Dream.
In the 1970s, however, Congress passed a ban on exports of U.S. crude oil. The ban may have made sense at the time, but it’s hard not to question whether the ban made oil busts (think mid-1980s) more painful and disastrous, or just how much it’s held back our local and national prosperity, especially in the last decade. It’s long past time to revisit the issue and lift the ban.
U.S. crude oil should have the opportunity to compete in the global marketplace. It’s not only right and fair, it’s urgent.
Legislation is slowly making its way through both chambers of Congress to remove the prohibition. On July 30, the U.S. Senate Energy and Natural Resources Committee narrowly approved a bill along party lines to lift the ban. Among the opposition was Sen. Martin Heinrich, who is quoted as saying, “before we make such a monumental shift in U.S. policy, I hope we can agree to expand our existing policy incentives for carbon-free energy sources.”
House Speaker John Boehner has said he supports repealing the trade restriction, and a bill was introduced earlier this year in the House with 110 cosponsors, including Congressman Steve Pearce.
The White House could also lift the ban by executive order, and President Barack Obama has given us in the oil patch some glimmers of hope in the last 12 months. Last summer, his Commerce Department green-lighted two oil companies to export condensates from the Eagle Ford region of Texas. And last Friday, the Commerce Department informed Congress it intends to approve an application by Mexico’s national oil company to exchange its heavy oil for similar quantities of U.S. companies’ light crude.
Urgency is mounting
One need not be an economist or a foreign-policy expert to conclude that there will be countries lining up to buy our crude oil, if not for the quality of the product, then for our national stability and the reliability of delivery. Do you know of several local businesses that sell the same product, but you’d rather buy from the one you know, like and trust, even at a premium? Even international financial markets can behave this way.
For the last year OPEC has shown tremendous resolve for its price war with American oil producers, but even oilfield companies right here in New Mexico have shown tremendous resilience. Producers and field-services companies have sharpened their pencils, reduced their labor hours and cut their margins in order to keep their employees working.
Fourth-quarter 2014 data from the State of New Mexico report that slightly more than 9,000 men and women in Lea County held jobs in oil and gas.
But as June’s unemployment report shows, these stop-gap measures are not sustainable. Lea County’s jobless rate reached a preliminary 6.4 percent, way up from the 12-month low of 3.5 percent in December.
The urgency is mounting.
More New Mexicans than those in the southeastern and northwestern corners of the state must rally behind this policy change. New Mexico’s oil production is as important an economic-development asset as any other. Arguably, it is the biggest such asset.
Benefit to New Mexico
New Mexico produced a record 332,000 barrels of oil per day in 2014 and ranked 5th in the nation for on-shore oil production, according to the latest U.S. Energy Information Administration figures.
Major, integrated oil companies have spent or earmarked billions in capital expenditures in recent years in the Permian Basin, and much of that in New Mexico. Like any other economic-development project, we have watched those investments create direct, indirect and induced jobs. But what’s unique about oil and gas, in terms of economic development, is the near-absence of incentives for the industry. It largely holds its own.
Most petroleum companies operating in the Hobbs area are independently owned small businesses, and many among them are minority-owned. In the fourth quarter of 2014, oil and gas workers made an average weekly wage that was 80 percent higher than the average weekly wage for all industries statewide. Of course, engineering firms, furniture stores, restaurants and others also thrive when oil production is profitable.
Being pro-oil does not mean being anti-environment. I challenge anyone to find a greater and more diverse exporter of energy than where I make my home. Lea County, which we call “the EnergyPlex,” demonstrates the “all of the above” approach to energy development, because enriched uranium, biofuels, fossil fuels and renewable energy are being produced every day right here. But our skies are clear, our water is clean and our soil is safe for my kids to play on. We’re doing it right.
Scarcity isn’t an issue
U.S. Sens. Lisa Murkowski, John McCain and Bob Corker wrote in April’s Foreign Policy magazine, ”There is simply no reason — legal, political or economic — for our nation to refuse to sell energy to our friends and allies.” Today’s American oil policy is held hostage to memories of long lines at the pump in the mid-1970s, when the world was perceived to have had an oil shortage.
Through innovations in technology and techniques, U.S. oil producers have extracted more oil and proven the existence of more U.S. oil reserves in the last 10 years than at any other time in our history. Scarcity is no longer the issue.
It’s time we treat oil as we do almost every other good produced in America that international customers want. It’s time to can the ban.
On Aug. 25, I will be among the panelists participating in a breakfast discussion hosted by the New Mexico Association of Commerce and Industry on how lifting the ban on crude exports could benefit New Mexico. Doors will open at 8:30 a.m. at the Crowne Plaza Albuquerque, and the program will begin at 9.
Grant Taylor is the president and CEO of the Hobbs Chamber of Commerce.