U.S. should look to Canada and Australia as examples of robust global energy markets
“Fuel-supply insecurity is a thing of the past. Unrestrained export of crude oil embraces the free market and U.S. strategic interests,” authors Ariel Cohen and John Roberts write. “Allowing American oil companies to sell light crude overseas will encourage greater investment in U.S. domestic production, boosting oil revenues and creating jobs in exploration, production, transportation and shipping.”
Compared to peers like Canada and Australia, the United States is not especially hospitable to prospective foreign investors, particularly in critical sectors like energy, Cohen and Roberts note. In particular, the Committee on Foreign Investments in the United States (CFIUS) imposes an onerous application process that can be daunting to prospective foreign investors.
While supportive of elevated scrutiny for investments by government-controlled entities – particularly those from hostile or corrupt states or with links to terrorism – the authors argue the system should be streamlined to be less adversarial and more transparent. For instance, while elevated scrutiny is appropriate for foreign investments in energy-related transportation, refining and related infrastructure, which are tied closely to security concerns, it should be easier to attract foreign capital to upstream resources and activities, like exploration and production.
“Canada and Australia have similar foreign-investment consideration processes, yet have taken a less protectionist approach,” the authors wrote. “This has helped draw significant energy investment from foreign enterprises, bolstering resource development, energy security and job creation.”
In the current low-price oil environment, the U.S. energy industry will struggle to invest properly in the kinds of research and innovation that maintain improved domestic and global oil security in the future, Cohen and Roberts write. Mobilizing international sources of capital to fund development of and novel approaches to resource extraction will strengthen the industry over the long term.
“The U.S. government’s historic decision to overturn the export ban was an important victory, but more needs to be accomplished,” the authors wrote. “The gains in geopolitical strength, trade development and global oil security are already being realized. For national interests, the economy and global energy markets, free trade is the right choice.”