Within the past 10 years, innovation has transformed U.S. energy markets and solidified America's standing as the undisputed leader in energy technology. The shale revolution, driven by hydraulic fracturing and horizontal drilling techniques, has boosted U.S. production to record levels and strengthened the economic security of our nation. Sadly, a 40-year old relic of obsolete energy policy stands in the way of the U.S. maintaining its role atop the energy landscape.
In the 1970s, the U.S. government banned crude-oil exports in reaction to the Organization for Petroleum Exporting Countries (OPEC) driving oil prices, mile-long gas lines, rising inflation, a depreciating dollar and growing trade imbalances. It was a clear case of expedient politics and poor policy. Instead of protecting the U.S. from volatile price swings and limiting our reliance on crude-oil imports from other countries, this artificial barrier is actually hurting the very producers who unlock oil from shale-rich fields in places like North Dakota and Texas. Segregating U.S. crude from the world market has created price distortions that skew investment decisions and give foreign producers a leg up--the very opposite of the intended consequences.
It's time to call the question and examine whether we still need a four-decade-old obstruction to a freely traded physical oil market. The answer is unequivocally "no." Repealing the ban on crude- oil exports would not only allow our world-leading petroleum industry to operate with maximum flexibility and ensure its continued investment and development but also positively impact the U.S. economy.
In May 2014, energy-consulting firm IHS estimated that a reversal of the ban would bring roughly $750 billion in additional investment, boost U.S. crude production by an average of 1.2 million barrels per day and create an average of 394,000 additional U.S. jobs. That outcome would be meaningful not only from an economic standpoint, but also would enable our country to retain its leadership position both in the physical market and in the global trade.
From a consumer standpoint, eliminating this archaic energy policy will by no means result in pain at the pump. Rather, sensible and timely legislation, which allows the U.S. to ship some of the more than 9 million barrels per day it produces overseas, actually has the potential to lower the price of crude globally. That's an outcome that's good for drivers and good for the health of our economy.
As a global leader in financial markets, the U.S. should be the place where benchmark prices for crude oil and refined products is determined. Congress should repeal the ban on crude-oil exports and align our energy policy with today's market dynamics.
America's participation in the global free market for crude oil should not come at the expense of our safety. Nothing is more important than our environment, and we have made a lot of progress in the last few years by implementing new regulations and imposing tighter restrictions on fracking and the transportation of oil.
As the world's largest energy producer, our country has the opportunity to be at the center of the global oil trade, which will allow us to benefit from our technology and financial leadership and better position us to reap the potential economic gains. For lawmakers, it's simple: Flip the calendar, take our crude policy to 2015 and let the market decide.
Commentary by Terry Duffy, the executive chairman and president of CME Group, the world's leading and most diverse derivatives marketplace. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate.