The 1973 OPEC oil embargo was a wake-up call to America. Occurring at a time when U.S. oil production was in decline, the quadrupling of oil prices in 1974 resulted in President Ford signing the Energy Policy and Conservation Act in 1975, which banned the export of U.S. crude oil. The goal was to insulate America from the potentially volatile global crude markets that proved to be a danger to our economic prosperity. However, as the second price spike (from the Iranian Revolution) and 2007 proved, this policy has not worked. 

Is it time to lift the oil export ban?
Today, numerous countries are pressuring America to lift its oil export ban, including South Korea, Mexico, and the European Union. South Korean President Park Geun-hye recently met with a congressional delegation of House members, including Texas Republican Joe Barton, Marsha Blackburn of Tennessee, and Leonard Lance of New Jersey regarding support for lifting the 39-year old ban. 

Meanwhile, Energy Secretary Ernest Moniz stated that during his most recent trip to Seoul, South Korea's Energy Minister brought up the issue as well.

In addition, Jose Manuel Carrera, the CEO of PMI Comercio Internacional, the trading arm of state-owned oil company PEMEX, recently told Reuters that his company has been discussing beginning oil shipments from the U.S. with government officials and potential sellers.

Why the sudden pressure to lift the ban?
The reason for the recent pressure is simple and two-fold. Thanks to the shale revolution, the U.S. is now awash in oil and gas, and our allies need it. 

South Korea imports 97% of its energy from nations such as Iran. The U.S. and EU have been pressuring them to stop because of the sanctions we introduced against Iran in 2012. 

Similarly, Mexico's oil production has been declining for nine straight years. The situation is so dire (PEMEX provides 33% of Mexico's federal budget) that on December 20, 2013, Mexican President Pena Nieto signed an amendment to the Mexican constitution that allows, for the first time in 76 years, foreign, private investment into Mexican oil and gas fields.

Meanwhile, Europe, which has joined America in opposing Russia's recent actions in the Ukraine through sanctions, is vitally concerned about Vladimir Putin's leverage over the continent's energy supplies. Russia supplies 30% and 35% of Europe's gas and oil, respectively (36% and 39% for Germany). 

The situation is far worse for nations such as Austria, Turkey, and Greece, which get 50% of their gas from Russia, while the Czech Republic and Finland are 100% dependent. 

The geopolitical situation has escalated to the point that gas prices have soared 35%, and our European allies fear that Russia may cut off its gas entirely this winter. The Europeans are going so far as to make an emergency contingency plans to stockpile gas, in case Russia turns off the gas taps, by banning the reselling of gas and even imposing limits on its industrial use. Given that the EU's economic growth was non-existent at just 0.2% in the second quarter, and the fact that these actions might very well put Europe into a recession, one can see just how scared our allies are about their dependence on Russian energy.

Global oil demand rising, as are disruptions in supply
According to the International Energy Agency (IEA), world oil demand is expected to rise 1.3% or 1.2 million barrels per day (bpd) to 93.8 million bpd in 2015. That demand growth is coming from nations such as India, whose oil demand is up 3% (101,000 bpd) this year and expected to rise by more than double that in 2015 (up 6.24%).  

Though this forecast is a downward revision from last month, in the face of growing global oil disruption, the world's spare capacity (which maintains price stability) is becoming dangerously slim. 

As the above graph illustrates, turmoil in the Middle East and sanctions against Iran have taken 4% of the world's oil supply offline. Should sanctions against Russia be taken to their extreme potential limits, that figure could continue to grow.

America: the world's swing oil producer
The IEA estimates that U.S. oil production will overtake Russia and Saudi Arabia's in 2015 (including natural gas liquids it already has).

Despite the global supply disruptions and escalating geopolitical tensions with Russia, oil prices are near 13-month lows, and this Labor Day, gas prices were the lowest they've been in four years.

Analysts at Goldman Sachs credit America's booming shale oil industry with this surprising price stability and predict it will continue over the next year.

What happens if America restarts oil exports?
Companies such as Enterprise Products Partners (NYSE:EPD) and Pioneer Natural Resources (NYSE:PXD) have already received permission from the U.S. Commerce Department to export lightly processed condensates (a form of oil), and because 27% of production from the prolific Eagle Ford shale is condensates, analysts believe this form of oil export might hit 1.7 million bpd by 2018.

Companies such as ExxonMobil (NYSE:XOM) and ConocoPhillips (NYSE:COP) are lobbying for the elimination of the export ban entirely, arguing that America's record export of gasoline and diesel prove exports won't raise domestic energy prices. 

According to research and analysis firm IHS, lifting the oil export ban would lower gas prices by eight cents per gallon because oil companies would likely increase production enough to lower the global oil price and offset the decreased domestic supply. In fact, IHS's latest study indicates that ending the export ban would be a major boon to both the economy and federal budget:

  • $1.3 trillion in additional tax and royalty revenues to the government between 2016 and 2030.
  • 4.76 million jobs created through 2030, peaking in 2018, with 964,000 jobs created that year.

Noted energy historian and IHS vice chairman Daniel Yergin recently told reporters, "This would be a significant economic stimulus that would be paid for by the private sector, not by the government -- in fact, the government would make a lot of money."

Foolish takeaway
Given that August's job numbers of 144,000 came in 36% below analyst expectations, and given that American energy abundance appears to be the new normal, it's time America reconsidered its stance on oil exports. The benefits to America's economy, federal budget, and allies are simply too large to ignore in the face of today's economic and geopolitical realities. 

Adam Galas has no position in any stocks mentioned. The Motley Fool recommends Enterprise Products Partners. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.