For Immediate Release:

Friday, December 11, 2015

I. INTRODUCTION
“Safety and certainty in oil lie in variety and variety alone.” Winston Churchill¹
It was as First Lord of the Admiralty, leading up to World War I, and in the context of the British Navy’s new dependence upon imported fuel oil from Persia, that Winston Churchill declared that energy security lay in a variety of oil suppliers.
For decades, this proclamation held true. However, the paradigm of energy security has changed. Energy security today requires not just a variety of energy suppliers, but a variety of energy resources. The United States possesses both and is in a position of strategic energy security.
The United States had achieved energy security prior to 1950 (then thought of in practical terms and discussed as energy “independence”). At that time, the USA was producing more than 50 percent of the world’s oil.^2,3
It wasn’t until some time after World War II that the economic boom demanded more oil than United States wells could produce. From 1950 to 1973, US oil imports grew rapidly: from zero to about 32 percent of domestic consumption.⁴
In 1973 came the infamous oil embargo that lasted 6 months. The embargo severed oil imports from the Middle East, causing severe fuel shortages and gas rationing. This “oil shock” precipitated a 40-year ban on the export of crude oil with an eye to preventing such a thing from happening again.⁵
The key piece of legislation which enabled the ban to be placed is the Energy Policy and Conservation Act (EPCA). It was signed into law by President Ford in 1975. The EPCA explicitly permitted the President “to restrict exports of coal, petroleum products, natural gas …” It also set up a mechanism via which any export of crude oil would have to be licensed by the Bureau of Industry and Security (part of the Department of Commerce.) This piece of legislation, along with supporting amendments to other pieces of legislation, resulted in a network of restrictions that came to be referred to as the crude oil export ban. ⁶
A cascade of initiatives (such as lowering highway speeds, converting oil power plants to coal, construction of nuclear power plants, and completion of the Trans-Alaska Pipeline System) aimed at achieving energy independence were also authorized and executed in the decades that followed.⁷

More recently, there have been major advances in technology (a combination of hydraulic fracturing, horizontal drilling, and seismic imaging), which have quickly opened up vast resources of oil. Today, there is an excess supply of crude oil in the United States^.8
The crude oil export ban was predicated on a threat to national security that existed in 1973. In 2014 however, the energy scarcity and therefore the national security risk that justified the ban is no longer a reality.
The ban therefore violates the Export Taxation Clause of the United States Constitution.
 
II. THE ANATOMY of the EXPORT TAXATION CLAUSE
A. The text
According to the Export Taxation clause of the United States Constitution, “No Tax or Duty shall be laid on Articles exported from any State.” ⁹
The post The Export Taxation Clause and the Illegality of the Crude Oil Export Ban appeared first on Canary, LLC.