The decades-old ban on crude oil exports is anachronistic, completely disregards basic economics, and on top of it all, arguably makes gasoline more expensive for American motorists.
In early September, a House subcommittee voted to lift the US government’s ban on crude oil exports, which has been in place since the 1970s. The fact that we are even having this discussion shows just how crude (pun intended) public policy remains.
The Crude Oil Export Ban Is Anachronistic
Ludwig von Mises argued that the logic of interventionism could not stop short of full-blown socialism. Any isolated intervention — such as a price control on a particular product — would generate undesirable consequences, leading to further interventions.
The ban on crude exports sounds plausible to the man on the street for a simple reason: it forces producers to “keep oil here at home” for Americans to use, rather than selling it to foreigners.
We see this pattern in the case of oil. In response to the price surge in the 1970s surrounding the Arab oil embargo (and also, I would argue, Nixon’s decision to go off the gold standard), the US government enacted a complicated system of price controls with stringent caps on “old oil” produced from operations that were already established before the price controls. In a speech to the Brookings Institute last year, Harvard economist Larry Summers explained the connection between price controls and the crude oil export ban:
The reason we have a ban on crude oil exports in the United States is that in the 1970s when the price of oil spiked due to the formation and effective implementation of the OPEC cartel…we respond…