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Why Lifting Oil Export Ban Can Help U.S. Foreign Policy

October 6, 2015 in Economics

By Emma Ashford

Emma Ashford

A House of Representatives bill is due to go to the floor this week, one step closer to lifting the 40-year-old ban on the export of U.S. crude oil. The window of opportunity was opened by the continuing plunge in oil prices, now at a six-year low, as falling demand and booming production have created an overabundance of global supply.

Congress must seize this opportunity: Lifting the ban on crude oil export would not only be good for the economy, it could also benefit U.S. foreign policy.

U.S. firms have been unable to export crude oil since 1974 — a legacy of the energy security fears in the wake of the Arab oil embargo. The only exceptions are crude oil exports to Canada, and oil produced in Alaska. There are similar, if less draconian, export restrictions on natural gas, which requires a Department of Energy waiver.

These restrictions were an overreaction. But recent changes in the global oil market have made matters worse. Over the past decade, new technologies — particularly hydraulic fracturing or “fracking” — have enabled the extraction of oil and natural gas in previously inaccessible areas. The result has been a shift away from some traditional energy-producing countries — such as Russia or members of the Organization of Petroleum Exporting Countries – and toward newer producers.

Congress should seize the opportunity now to lift the ban, and reap the economic and foreign policy benefits so sure to follow.”

The biggest beneficiary of these technological advances has been the United States, now the world’s largest producer of oil and natural gas. Even under current restrictions, U.S. crude exports to Canada have risen dramatically, from essentially zero in 2007 to more than 100,000 barrels a day by March 2013. U.S. producers could contribute far more globally, but are largely prevented from doing so under the current bans.

The new oil produced is also at odds with U.S. refining capacity, which complicates domestic consumption. Fracking usually produces light sweet crude oil. U.S. refineries, however, are primarily set up to process heavier crude oils from Mexico and Venezuela.

This has led to domestic market distortions. Refiners can buy oversupplied crude on the cheap, but then charge consumers world market prices for gasoline, pocketing the difference.

Various studies have shown, however, that ending the ban would help the U.S. economy. It would add an estimated 630,000 jobs, increase manufacturing and boost the gross …read more

Source: OP-EDS

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Byrne: The Future Is Decentralized

October 6, 2015 in Economics

By Mises Institute

The Future Is Decentralized
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Byrne: The Future Is Decentralized

October 6, 2015

Mises Daily Tuesday: Transcribed from his appearance at Mises U, Patrick Byrne explains:

The costs of centralizing information are higher than people understand. Until they have worked in actual organizations that have missions like fighting a war or making a profit, people tend to underestimate just how expensive it can be to centralize information.

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Source: MISES INSTITUTE

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Obama Must Resist 'Do More' Calls on Syria

October 6, 2015 in Economics

By Brad Stapleton

Brad Stapleton

Russia’s recent intervention in Syria has ruffled feathers in Western capitals. On Tuesday came claims from NATO that Russia had moved ground troops into Syria, only a week after Russia launched its first airstrikes in the country. The moves prompted renewed calls from many in Washington — including former Secretary of State Hillary Clinton — for the Obama administration to impose a no-fly zone and begin arming the Syrian rebels in earnest.

President Obama should resist such clarion calls and refrain from escalating the conflict in such a manner. Indeed, he should be wary of much of the talk we are hearing about “doing more,” lest he risk exacerbating an already growing crisis.

Western powers were able to impose a no-fly zone in Libya in 2011 with ease, making it tempting to try to repeat the trick in Syria. But Libya was an unusually permissive environment for such action, and NATO aircraft faced virtually no resistance. That would surely not be the case in Syria. Indeed, now that Russian pilots are flying throughout western Syria, any attempt to impose a no-fly zone would present an unacceptable risk of direct hostilities between U.S. and Russian forces.

Neither imposing a no-fly zone nor arming the Syrian rebels will contribute to the resolution of the war in Syria.”

Moreover, a no-fly zone would offer limited benefits. It is typically easiest to restrict the operation of fixed-wing aircraft. For the past few years, however, Syrian President Bashar al-Assad’s forces have primarily used helicopters to deliver barrel bombs. A no-fly zone might therefore fail to counter what is actually the greatest threat to Syrian civilians.

Even if a no-fly zone were to succeed in grounding al-Assad’s helicopters, it would do little to arrest the fighting on the ground. In 2011, Obama authorized airstrikes against Moammar Gadhafi’s ground forces because he recognized that a no-fly zone alone would do little to prevent them from attacking rebel forces holed up in Benghazi. Although al-Assad’s ground forces have been seriously weakened, similar airstrikes would surely be necessary to forestall attacks against rebel forces.

That said, President Obama has evinced little inclination to impose a no-fly zone. What he does appear to be more susceptible to, though, are calls to arm the Syrian rebels. Last week, for example, he approved the direct provision of ammunition and arms to Syrian rebel forces.

Yet that decision is fraught with risks. …read more

Source: OP-EDS

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The TPP and the Trade Rhetoric

October 6, 2015 in Economics

By Carmen Elena Dorobăț

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The TPP and the Trade Rhetoric

October 6, 2015

After 19 rounds of negotiations spanning 5 years, hosted along the Pacific Rim from Bali and Lima to Hanoi and Hawaii, the TPP (Trans-Pacific Partnership) was signed yesterday in Atlanta by all 12 member governments and remains only to be ratified by each country. Although the text has not been made available to the public, and will not be for the next four years to avoid opposition, the TPP is publicized as a tremendous boost in free trade for the signing countries, and thus for almost 40% of world trade. It is supposed to ‘promote’, ‘enhance’, and ‘support’ many things, from innovation to investment and development, and job creation.

The language used, characteristic now of all such governmental agreements, is a clear indicator that the TPP is nothing more than additional thousand(s) of pages of new trade regulations, with a sprinkling of tariff reductions that will benefit some industries and companies, and hurt others. According to the Office of the Unites States Representative, the TPP includes chapters on no fewer than 22 issues: “competition, co-operation and capacity building, cross-border services, customs, e-commerce, environment, financial services, government procurement, intellectual property, investment, labour, legal issues, market access for goods, rules of origin, sanitary and phytosanitary standards, technical barriers to trade, telecommunications, temporary entry, textiles and apparel, trade remedies.”

This illustrates what Ludwig von Mises pointed out half a century ago: that the focus of these agreements has long shifted from trade liberalization (defined as removal of barriers) to trade regulation (or what we know today as “managed trade”) and the promotion of special interests. As Mises showed, “each country has a system of varying privileges for individual interest groups… [and] none of these measures would work if foreign countries were to freely supply the domestic market.” (Mises to Hoenig, letter dated December 6, 1951). Trade agreements only extend the regulatory power of governments and their ability to grant such privileges.

For free trade, in fact, multilateral negotiations, tax-funded conferences, and lengthy agreements are superfluous. Richard Ebeling—in a great piece addressing the various trade …read more

Source: MISES INSTITUTE