North Dakota Democrats love hating on Continental Resources CEO Harold Hamm, but this morning the state’s top elected Democrat appeared alongside him on CNBC’s Squakbox to defend his call to end America’s ban on exporting crude oil.
Heitkamp rejected the most common argument against ending the ban, which is that it would cause domestic gas prices to jump.
“I don’t know in what world increasing the global supply is actually going to raise the price,” Heitkamp said during the segment. “The more supply we can get into the marketplace, especially into Europe, the lower the international price is going to be.”
She’s absolutely right. While allowing crude oil exports is definitely of economic benefit to American oil producers, it isn’t necessarily going to cause oil prices to jump because we’re actually going to see a rise in the amount of oil available to international markets.
The oil markets are vast and hugely complex, but all things being equal exporting U.S. crude to the international market shouldn’t have that big of an impact on price. It will, however, end a bad situation wherein American refiners have a captive supply in the form of American oil producers. Right now because oil companies operating in the U.S. can’t export their product they really have nowhere else to go with it but American refiners (who can then export their refined product).
Commodities produced in North Dakota get exported all over the world to places like Mexico, Canada, Taiwan, the Dominican Republic, India, Thailand, Pakistan, China, South Korea, Vietnam, Italy and Spain. We wouldn’t dream of telling farmers growing wheat or flax soybeans that they can only sell their product in the United States, so why are we putting the oil companies in that situation?
“With the oil renaissance that’s come about here in American due to horizontal drilling, we have the resource developed and we should be exporting,” Hamm told CNBC. He, and Heitkamp, are absolutely right.
North Dakota Senator John Hoeven, along with Rep. Kevin Cramer, also support lifting the oil export ban. But Heitkamp’s position gets more notoriety, I suppose, most in her political party oppose the move.