As America's shale boom increases the domestic supply of natural gas, U.S. companies such as Dominion and Cheniere Energy prudently have used avenues to export natural gas to countries in Europe and Asia where higher demand translates into higher prices. Despite the private sector's willingness to invest billions of dollars in our country to develop the physical infrastructure necessary to export this "made in the USA" product, some in Washington are seeking to derail this economic boost by encouraging denial of export permits by the Obama administration's Department of Energy.
Rep. Ed Markey, Massachusetts Democrat, along with a few other lawmakers on Capitol Hill, is clamoring for the agency to say no to U.S. exports, despite the job growth and revenue-generating potential associated with these projects. These misguided demands for the government to curtail American natural gas exports are in contravention of our national interests, defying both economics and logic.
Substantial exploration efforts by energy companies have resulted in significant discovery of new reserves as well as increased production, making natural gas extraordinarily cheap and abundant in the United States as compared with Asian and European markets, where higher demand translates into higher pricing. Using supply-and-demand economics makes sense in a commercial environment.
Attempts by Washington lawmakers to take an obstructionist position against U.S. businesses are counterintuitive. Imagine the backlash if Congress opposed allowing Caterpillar to sell equipment overseas or the Department of Agriculture placed an export ban on surplus corn or wheat. How many U.S. factory workers and farmers would lose their jobs? The truth of the matter is that exporting our domestic surpluses to foreign markets where demand and prices are higher reduces our trade deficit while increasing our gross domestic product (GDP).
Yet, when the target is natural gas, the rules somehow change. Washington's disdain for fossil fuel has attracted the ire of domestic companies and our trading partners, both of which recognize that the latest anti-energy fad lacks a rational economic basis.
It is difficult to understand how any American lawmaker or administration would berate China for engaging in unfair economic manipulations while at the same time giving serious consideration to stunting economic growth by deliberately curtailing U.S. exports. In fact, President Obama even went so far in his recent State of the Union address as to promise, "I will go anywhere in the world to open new markets for American products." The president must back up his promises with policies and actions that encourage, not hinder, our economic recovery.
A natural gas export ban would discourage domestic natural gas producers from making a further investment in the American economy. Consider that the proposed natural gas exports necessitate expansion of existing facilities and construction of new infrastructure, resulting in significant economic benefits. For example, Cheniere Energy is working on construction of its Sabine Pass Liquefaction facility, which the company projects will create 30,000 to 50,000 jobs.
The effects of natural gas export restrictions are felt by more than just natural gas producers. Our entire nation feels the impact in the form of lost infrastructure development, job creation and contribution to the U.S. GDP and balance of trade. Taken in conjunction with the administration's recent rejection of the Keystone XL pipeline expansion project, special-interest groups' incessant push to interfere with needed infrastructure improvements sends the undesirable message that America isn't serious about growing our economy and, more important, it sends a strong signal to world capital markets that the United States actually isn't open for business.
Trillions of dollars in government spending and public-sector regulation have not helped our economy. Instead, they have acted as a braking mechanism, serving only to keep the economy mired in government mud. Washington must come to grips with the simple fact that private investment, not government regulation and uncontrolled spending, is the only way to grow our economy and move forward. By unleashing the power of the private sector, our economy will grow, and with the right approach, we can once again move down the road of growth and prosperity.
Brigham McCown, a managing director at United Transportation Advisors, was the first acting administrator of the Department of Transportation's Pipeline and Hazardous Materials Safety Administration.
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