As Iraq’s turmoil boosts global oil prices, it seems the US has found a way to soften the blow of the crisis. The US has announced that the ban on crude oil exports will be lifted, and production is at a 15 year high. The ban was instituted in 1973, at the time of the Arab oil embargo. The purpose of not exporting oil was so that the country did not face a shortage in the future, as well as to keep domestic prices low. This strategy to reduce dependency on foreign oil didn’t really work as it was cheaper to import than to ship oil from Texas.

Now, due to the new technology of “fracking,” the US has enough to export and the lifting of the ban will further encourage more production. Already, the US has more crude oil than it knows what to do with. The global market is breathing a sigh of relief at the prospect of not having to rely on the volatile Middle East in the future. The Gulf States meanwhile, need to be on the alert, as oil is their traditional bargaining chip in international relations. China and the Latin American economies will be the buyers and the US only stands to gain in the short run.

The US policy of hoarding crude oil didn’t make the US, or the world, a safer place. Iraq has a major share in the global export market, and most official reports say that oil production has not taken a hit form the ongoing conflict. This is a very optimistic assessment. BP and ExxonMobil have already evacuated some of their workers from Iraq. This could be the biggest shock to the oil market since 1973. That is not to say that the US or the world market is safe if Iraq falls. Economics is a strange game. An oil shock would actually weaken the case for the US export ban as the knee jerk reaction by the Congress is usually protectionist, and the US can gain monetarily from the export- it still needs to import other refined and unrefined oil. Of course, the questions is, does this mean that we can expect energy prices to fall in the future? The simple answer is probably, No. Even with the US surplus, global demand is rising. In the short run however, given that the global crude demand is expected to rise further, US oil could be very useful if the Iraq conflict is to continue.