Here’s a letter to the Wall Street Journal:
John Deutch joins those who wisely call for an end to Uncle Sam’s ban on crude-oil exports from the U.S. (“Amplify the Oil Boom by Liberating U.S. Exports,” Aug. 12). While it’s true that lifting this ban is unlikely to raise fuel prices here at home, Mr. Deutch and others miss the single most important economic reason to lift the ban: doing so will promote faster long-term growth by encouraging firms and workers, in America and abroad, to specialize in those industries for which they each have a comparative advantage.
The export ban causes us Americans to import less than we would without the ban. The reason is that the ban – by making foreigners’ purchases of crude oil from the U.S. unlawful – reduces foreigners’ demand for U.S. dollars. Foreigners therefore become less willing to sell goods and services to Americans. With the volume of American imports thus artificially reduced, some goods and services that Americans would otherwise have imported from lower-cost foreign suppliers are instead produced at home at higher costs using domestic resources and workers. The export-ban’s diversion of resources and workers out of industries where they are most productive and into industries where they are less productive dampens economic growth in America (and abroad) regardless of what happens to the prices that Americans pay for fuel. The final result is a reduced standard of living for hundreds of millions of people, even if the ban also results in lower fuel prices for Americans.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030