WHEN Congress finally lifted the 1970s-era ban on U.S. oil and gas exports, supporters argued the change would strengthen the nation’s leverage in international affairs. That’s proving true.
In the ongoing tariff debate, Chinese officials announced they would impose retaliatory 25 percent tariffs on $16 billion worth of U.S. imports after the Trump administration issued similar tariffs against China. Initially, the list of U.S. products subject to Chinese tariffs included oil, but it was quickly removed from the list. Why?
“China’s decision … may signal its realization that the country would have more to lose from a 25 percent tariff on U.S. crude as the supply related uncertainty deepens in the global oil market,” Jane Nakano, a senior fellow in the Energy and National Security Program at the Center for Strategic and International Studies, told the Washington Examiner. “Denying itself access to U.S. crude would have made crude oil imports more expensive for China and may have triggered energy security concern, especially if world developments drive up the global oil prices.”
This is notable because China has gone from importing no U.S. oil before 2016 to importing 15 million barrels in June. That trend has benefited Oklahoma directly — Continental Resources is among the exporters. In 2017, Continental announced an agreement to sell more than 1 million barrels of oil to China.
As we noted at the time, Chinese dependence upon U.S. energy supplies strengthens this nation’s international sway and makes any importer less likely to disrupt the supply chain. That point is overlooked often by critics who object to “our” oil supplies going to any buyer outside the domestic market, but it was a major consideration when Congress ended the ban in 2015. That year, Sen. James Lankford, R-Oklahoma City, noted Russia’s growing international clout was tied in part to its ability to supply energy to eastern Europe. The increasing presence of U.S. oil in international markets now counters that influence.
Growing export of U.S. liquefied natural gas could be equally beneficial, although ongoing trade tensions threaten to stymie that market. Officials in China, which imported half a million tons of U.S. LNG worth almost $300 million in January, continue to threaten to impose higher tariffs on LNG. Japan, South Korea and China represent a huge market opportunity for U.S. producers. Citizens in Oklahoma, which typically ranks in the top three natural gas-producing states, should hope President Trump’s trade negotiations lead to agreements and not more tariff escalation.
Even so, the impact of surging U.S. oil production and the growing export of that product has increased U.S. global power. Policymakers must not discount that benefit and must keep tax and regulatory policy as pro-energy as possible.
The repeal of the export ban came from political horse trading. Congressional Republicans received Democratic support to end the ban in exchange for Republican support for some Democratic spending priorities. That far-sighted move was one of the Republican Party’s biggest achievements during the Obama years and continues to pay off today.
(c)2018 The Oklahoman
Visit The Oklahoman at www.newsok.com
Distributed by Tribune Content Agency, LLC.