US must allow crude exports to sustain its oil boom

ONE of the economy's good-news stories is the oil boom, a derivative of the natural gas boom. When the drilling techniques used to tap vast new reservoirs of natural gas were applied to oil, they yielded similarly astounding results. Since 2008, US oil production has increased from five million barrels a day (mbd) to 8.3 mbd in 2014. The US Energy Information Administration says it could go to 9.6 mbd by 2019.

By all logic, we should be working to sustain the boom. We aren't, and therein lies a classic example of how good policy is held hostage to bad politics and public relations. What would promote continued exploration is a lifting of the current US ban on exporting crude oil. Let producers sell into the world market. But that seems (wrongly) an unjustified giveaway to industry. The public perceptions are atrocious.

Hardly anyone expected the oil boom, with some notable exceptions - prominently Harold Hamm, who pioneered North Dakota's Bakken field. "Fracking" (the injection of pressurised water into fields to make oil and natural gas flow) and "horizontal drilling" (the use of one pipe along a single oil reservoir) changed everything. Formations of "tight oil" embedded in shale or dense sandstone became economical to produce.