The U.S. Congress is taking steps to remove a long-standing ban that, until about five years ago, was largely irrelevant because of falling oil production. On Dec. 15, Republicans and Democrats agreed to a 2016 budget deal that will lift the U.S. ban on crude oil exports in exchange for tax incentives on investments in renewable energy.
The lifting of the ban is a reflection of rekindled hopes that the United States could achieve its long-time goal of energy independence. Indeed, since 2008, rising oil production in the United States and Canada not only reversed both countries' declining outputs but also boosted their combined total to its highest level in history.
But despite climbing output levels, the United States and Canada are still far from achieving self-sufficiency in oil production. Even with the export ban in place, the United States continues to rely on foreign oil. For example, U.S. imports from the Persian Gulf totaled nearly 1.9 million barrels per day in 2014 — an amount higher than that seen between 1980 and 1998, despite lower production levels at the time. That said, the ban's removal could raise the country's imports somewhat. For each barrel of U.S. oil that leaves the country, U.S. consumers will demand a barrel of oil to replace it. Nevertheless, the United States' interest in and dependence on countries that are important to the global market will remain largely unchanged.
Every U.S. administration since the 1973 oil embargo has touted the concept of energy independence as a way for the country to become less dependent on foreign oil suppliers. But it is an unattainable goal, even if the United States were to produce enough oil to meet its domestic needs. The United States stands at the center of the global economy, and its economic prospects are intimately linked to those of the world. In short, with or without the ban on crude exports, the United States cannot fully isolate itself from fluctuations in the global oil market.
