The People of America's Oil and Natural Gas Indusry

On U.S. Natural Gas Exports, No False Choices

Mark Green

Mark Green
Posted March 21, 2014

The Huntsman Corporation’s Peter Huntsman has this op-ed in USA Today that invokes a poll in which people were asked to respond to these statements:

Some say that exporting American natural gas to other countries will increase economic growth, keep thousands employed, and help increase domestic production of natural gas. Others say that American natural gas should be used here at home, where it can lead to thousands of new manufacturing jobs, grow the entire American economy, and keep prices of natural gas affordable. Which comes closest to your view?

Actually, it’s a false choice, a little bit of opinion polling flim-flammery. We can have both – as careful, scholarly research (see here and here) has shown. We have ample natural gas reserves to supply the needs here at home as well as those of friendly overseas buyers (chart):

natgas_consumption_export

USA Today editorializes:

The United States could export 12 billion cubic feet a day, equal to about 15% of current production, while hardly breaking a sweat. The Energy Department estimates that this would have only a modest impact on domestic prices, more than offset by the economic gain.

Studies say exports will add jobs, grow our economy and spur more domestic production while accruing to the U.S. the benefits of being an energy superpower, including greater influence around the world, as Gen. Martin Dempsey, the Joint Chiefs chairman, recently described:

“An energy independent and net exporter of energy as a nation has the potential to change the security environment around the world – notably in Europe and the Middle East. And so, as we look at our strategies for the future I think we’ve got to pay more and particular attention to energy as an instrument of national power, because it will very soon in the next few years potentially become one of our more prominent tools.”    

Returning to Huntsman, he writes that U.S. natural gas is a good-news story:

The majority is right: Affordable and abundant natural gas is powering a manufacturing resurgence, with companies seeking to invest more than $100 billion in new facilities, creating high-paying jobs this country needs. And despite recent spikes from winter demand, consumer prices are still manageable.

 But then raises a phony scare:

All that will change if the oil and gas lobby gets its wish to send unlimited amounts of liquefied natural gas (LNG) to countries that haven't signed free trade agreements with the United States. Costs to consumers and manufacturers will soar, hitting pocketbooks and halting the reshoring boom.

We say phony because there won’t be “unlimited” amounts of liquefied natural gas (LNG) to send anywhere and costs won’t “soar.” Exports will provide net benefits to our economy while domestic manufacturing will keep growing. We’ve discussed the mythology of “unlimited” or “unfettered” LNG exports before, here. It dismisses basic economics – that the laws of supply and demand are supreme in free markets.

Global demand will set LNG export levels for the U.S. and other suppliers around the world, and not all LNG export facilities will be built. Thus, the United States is in a race to develop the natural gas exporting facilities necessary to capture a share of an emerging global market for LNG. So far, the Energy Department has been ponderous in its approach, approving just six applications to build export terminals since 2011, with more than 20 still pending. API’s Erik Milito, director of upstream and industry operations:

“Time is of the essence on LNG approvals because these $10-, $15-, $20-billion investments could go to another place in the world where there are 60 other projects moving forward. … Our point here is let’s let the market figure it out. The more the government has a process where these decisions are delayed, the more the government is actually helping to drive investment outside the United States because we’re creating a disadvantage for the companies that aren’t getting through the process.”

We have the natural gas, and we have advanced hydraulic fracturing and horizontal drilling to safely and responsibly develop this energy wealth for jobs and economic growth here at home, while also supplying allies abroad – but only if we choose policies to harness that wealth.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.