In his State of the Union address this year, Donald Trump boasted that the United States “has become the number one producer of oil and natural gas in the world, by far,” giving credit to his administration’s “bold regulatory reduction campaign.” Whether an increase in oil exports deserves praise or censure depends on your view. Either way, Barack Obama’s White House is probably the one responsible for the trend, as Obama himself boasted to an oil industry-sponsored gala after leaving office.
It was Obama who—following two years of concerted pressure from the fossil fuel industry—signed a bill passed through a Republican-controlled Congress, ending a 40-plus-year-old ban on crude (unrefined) oil exports that had been instituted in 1975 in response to the decade’s oil crisis. The repeal failed to pass on its own. But nestled into an omnibus spending bill in 2015, the same language snuck through mostly unnoticed by those not engrossed in the issue, with a bipartisan vote. Obama signed that bill into law days after world leaders hashed out a more high-profile aspect of his environmental legacy: the Paris Climate Agreement.
Today, despite the colossal impact the 2015 change has had on world energy markets and the planet, 2020 candidates and even Green New Deal proponents have been relatively quiet about it. Reinstating the crude export ban could be one of the single simplest, widest-reaching climate policy options available to the next Democratic president, who could bring it back without congressional approval on day one. Leaving fossil fuel exports as is could prove disastrous.
Lifting the ban was rooted in a futile hope: that it was possible to pursue climate policy without hampering fossil fuel production and sales. Instead of curbing oil supply, Greenpeace USA Senior Research Specialist Tim Donaghy told me, the Obama administration focused on “policies that reduce demand for fossil fuels.” The loudest backlash to this approach, at the time, came from indigenous-led fights against projects like the Keystone XL and Dakota Access pipelines and the broader climate justice movement, who demanded the White House “Keep It in the Ground,” per one popular slogan. Climate science similarly suggests that to save the planet, much of the world’s oil needs to stay buried. The United Nations Environment Program’s “Production Gap Report” recently found that governments are planning to produce 50 percent more fossil fuels than is consistent with a guardrail of two degrees Celsius (3.6 degrees Fahrenheit) outlined in the Paris Agreement, and 120 percent more than is consistent with limiting warming to 1.5 degrees. “It was a little bit wishful thinking to think we could address climate change and drill like crazy for oil and gas, and maintain a strong fossil fuel industry as we reduce emissions,” Donaghy said.
Repealing the ban was also the result of intense, multiyear lobbying efforts, helmed by the American Petroleum Institute and industry groups like Producers for American Crude Exports, composed of drillers with heavy interests in shale oil and gas. In the third quarter of 2015 alone, organizations and companies spent $38 million in Washington, with oil interests vastly outspending environmentalists and consumer advocates. Their interest in nixing the ban stemmed from a rapidly evolving sector of the energy market: After the Great Recession, cheap debt and technology made it newly possible to extract large quantities of light, hard-to-tap shale oil, which was more difficult to refine at scale here given that much of America’s refinery infrastructure is set up to process heavier imported oil.
To help it push against export restrictions, the industry appealed not just to Republicans but to former Democrats. It found a sympathetic audience in former Representative Joe Barton, a Texas Republican who has accepted generous donations from PACs tied to the oil and gas industry. As journalist Bethany McLean detailed in her 2018 book Saudi America, lobbyists leaned on Democrats from resource-rich states, such as Heidi Heitkamp, and several former Obama administration officials. Former Treasury Secretary Larry Summers told the Brookings Institution that the merits of repealing the export ban were “as clear as the merits with respect to any significant public policy issue I have encountered.”
In a paper for Columbia University’s industry-supported Center on Global Energy Policy, then recently departed Obama White House adviser Jason Bordoff and Trevor Houser, Hillary Clinton’s top energy adviser in 2016, released a paper at the start of 2015 arguing for repeal. Among other considerations, they cited national security benefits and a potential to boost the U.S. economy, writing that the “original rationale for crude export restrictions no longer applies.” Three of the report’s 80 pages are devoted to a discussion of potential climate and environmental impacts, concluding that reducing emissions mostly lies outside the scope of the export debate. “We can support domestic production while still meeting our climate change objectives,” Bordoff and Houser write, “but that requires new policy to reduce US oil consumption and production-related GHG emissions, as well as action in other sectors.”
In the end, the White House negotiated a few green sweeteners in exchange for backing the repeal, which Obama had previously threatened to veto. Not insignificantly, those included a temporary extension of the wind and solar energy tax credits that were due to expire abruptly and an agreement from Republicans not to block a $500 million payment to the U.N.-managed Green Climate Fund.
Tyson Slocum, director of Public Citizen’s Energy Program, was lobbying at the time against the change, as well as against resurgent gas exports. He had some modest success and, working with allies on the Hill, had gotten several Democrats to stand against revisions. “The minute that Obama signed off on it,” he told me of the deal, “congressional efforts just evaporated instantly because their bargaining power was gone. I don’t know if we would have won, but we were starting to pick up momentum. We were starting to gain support, and then all the momentum was gone.”
Environmental activists broadly opposed the trade-off for fear of increasing fossil fuel production and thus emissions. Clean energy groups and companies pushed for it to avoid an abrupt subsidy cut-off—many of them unaware of just how profound an effect lifting the ban would have. Oil prices, after all, had just crashed, and little about the U.S. energy sector seemed poised for a big export boom.
Nevertheless, the ban’s effect proved monumental. Prior to December 2014, just 4.75 percent of oil drilled in the U.S. was exported, mainly to Canada through one of the loopholes in the ban. Today, roughly one in four barrels of oil extracted in the U.S. is sent abroad, and total fuel exports have grown more than 750 percent. The U.S. is now the world’s largest producer of both natural gas and crude oil. Lifting the export ban transformed the global energy system and has helped pour prodigious amounts of extra greenhouse gas into the atmosphere.
The pollution fossil fuels cause once they’re combusted abroad generally isn’t counted toward national greenhouse gas totals, but the end result is the same wherever the fuel is burned: more carbon in the atmosphere. A report compiled by Greenpeace last summer found that even if ambitious, Green New Deal–style policies were enacted within U.S. borders, failing to account for emissions sent abroad could undercut up to half of emissions reductions at home—blowing through our shared carbon budget even as the country reaches net zero. As Donaghy and other researchers found, restoring the export ban could bring down emissions by as much as 165 million metric tons per year—on par with Obama’s proposed light-duty vehicle efficiency standards or closing 42 coal plants—with the stroke of a pen.
Bernie Sanders (who voted against the 2015 bill) and Elizabeth Warren (who voted for it) have each pledged to reinstate the crude export ban. The former has promised to do so by executive order, declaring a climate emergency, per the text of the spending bill. Biden—confronted by Greenpeace last year on camera—agreed to restore the ban but has not yet returned a request for comment elaborating that position, which does not appear in his platform. Pete Buttigieg’s plan references eliminating subsidies for fossil fuel exports, but his campaign has likewise not responded to a request for comment clarifying that position. Amy Klobuchar’s plan does not reference fuel exports, and her campaign also did not return a request for comment.
Opposition to this relatively limited talk of repealing the ban has come from surprising sources. In a terse editorial responding to Sanders’s plan, The Washington Post warns that it “would simultaneously harm the U.S. economy and help the dictatorships of Russia, Saudi Arabia and Venezuela,” who “would immediately rush to fill the void,” ballooning revenues that “fund repression, foreign intervention and bureaucracy.”
Yet beyond the manifest climate risks, it’s unclear that keeping crude exports as they are even makes economic sense. Lifting the ban was intended to open markets for all the new fuel produced by the shale boom that the U.S. didn’t need and couldn’t refine, not feed some dire domestic demand. Thanks to the spike in U.S. production, there’s currently a glut of oil and gas on the world market, so much so that domestic producers are drilling more than would seem to be justified by rational microeconomics—never mind the blow to emissions. The value of many unconventional drilling companies has long been measured on productivity growth and acreage owned rather than actual profits, giving them an inborn drive to produce by any means necessary. After years of unprofitability, that’s started to change as investors begin losing patience. Still, frackers hold considerable debt and have kept drilling fast to feed export markets; 42 fracking-focused companies filed for bankruptcy last year, doubling the dollar value of sector bankruptcies over 2018. There are currently few supports in place to ease workers through layoffs and rig closures, whatever the source. That’s why Donaghy and his co-authors on the report argue for a managed decline of the industry that can make workers whole rather than leave their livelihoods at the mercy of energy executives or private equity firms.
Nor is it clear that keeping exports as they are would help American energy security. Energy independence, University of Missouri historian Victor McFarland told me, was a part of the American political imagination for much of the last century but particularly following the OPEC supply cuts in the 1970s, after which Gerald Ford signed the sweeping Energy Policy and Conservation Act, which created the export ban. Combined, lifting that amid the shale revolution—such as it is—could now see the U.S. become a net exporter of fossil fuels as early as this year, according to the International Energy Agency. A longtime dream of American lawmakers would be achieved.
But the goal itself is bound up in the preoccupations of earlier generations and energy landscapes, and plainly out of touch with the realities of a warming world. Real energy independence is impossible so long as it relies on fuels closely tied to the global market and the burning of which carries its own catastrophic effects for every policy field under the sun.
It’s not hard for Democratic presidential contenders to go after Trump’s record on climate. Anyone vying for the party’s nomination, though, will have to confront Democrats’ own legacy of looking out for the fossil fuel industry.