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What The Captain & Tennille Teach Us About Energy Policy

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Love apparently didn't keep the '70s pop duo Captain & Tennille together. Toni Tennille has filed for divorce from Daryl Dragon after 39 years of marriage. Just as the pair's most famous standard now rings false, so does our 1970's notion of energy security. For the past 40 years, U.S. energy policy has been married to the idea of scarcity. Following the oil embargoes of the 1970s, we built policies, from export bans to ethanol mandates, based on the idea that we would forever be at the mercy of other oil-producing nations.

The hydraulic fracturing boom, however, has changed all that. North America is undergoing an energy renaissance. Domestic crude oil production has reached parity with imports, and the International Energy Agency predicts the U.S. may become the world's largest energy producer as early as next year. Yet our policies remain stuck in the dark ages of scarcity. Lawmakers on both sides of the aisle are resisting efforts to lift the 1970s-era ban on crude exports, citing issues of "energy security."

As Sen. Edward Markey, D-Mass., told the Wall Street Journal:

If we overturn decades of law and send our oil to China and other markets, oil companies might make more money per barrel, but it will be American consumers and our national security that will pay the price.

There's a difference between ensuring our energy security and hoarding resources. With our newfound abundance, security comes through continued development of domestic reserves. Forty years of scarcity and fears of being held hostage by unfriendly oil-producing regimes has blinded us to the obvious: exporting oil is no different than exporting any other commodity. During the four decades that the U.S. has banned oil exports, it has worked to expand free trade around the world, and the economic benefits of those efforts has been clear. Free trade has boosted competition on a global scale, encouraged innovation, and increased our standard of living at home by driving down prices for a broad range of goods.

Oil, of course, isn't traded on a free market. Its price is controlled by an international cartel, OPEC. But the rise of U.S. crude production is loosening OPEC's grip on the global market. In a year that saw a civil war in Syria, unrest in Libya and saber-rattling against Iran, 2013 oil prices remained relatively stable, in part because U.S. production smoothed over potential market disruptions.

Energy is one of the most robust and lucrative markets in the world, and the U.S. should be an active participant. The idea of "energy independence" is popular political rhetoric, but it ignores the realities of the 21st century energy market. What we need is interdependence -- a growing network of trade relationships that will enable the U.S. to become an active player in global energy markets instead of being held hostage by it.

Last year, the Department of Energy commissioned an economic study of liquefied natural gas exports that predicted that exporting natural gas would have a net economic benefit to the U.S. When similar studies are commissioned on oil exports -- and with Congress expected to hold hearings on the matter soon, such studies are inevitable -- expect the same conclusions.

Some refiners oppose oil exports, just as some large manufacturers oppose gas exports. They fear rising prices for their feedstock will undermine the profits they've been able to make from cheap domestic oil and gas. You can't blame them for wanting to keep their raw materials cost down, but there's a tinge of hypocrisy in the refiners' opposition. After all, even as they oppose exporting crude, refiners have increased their exports of refined products -- such as gasoline, diesel and fuel oil --  to historic levels. Clearly, they understand the benefits of free trade as well.

Fears of gas lines and embargoes seems as out of place in today's energy markets as "Muskrat Love" on today's Top 40.