Democrats debate amongst themselves: Should we curb natural gas exports?

posted at 5:07 pm on January 5, 2012 by Tina Korbe

It was only just a matter of time. When the U.S. became a net exporter of petroleum products, I warned that politicians might just begin to talk about restricting gasoline exports. As it turns out, I was half-right and half-wrong. Sure enough, at least one politician has begun to talk about restricting exports — but of natural gas, not oil-based fuels.

Right now, we export very little natural gas — but the abundant fuel currently draws higher prices in foreign markets than it does in the U.S., which makes exporting attractive to producers. Under a 1938 law, the Department of Energy has authority to permit or restrict liquefied natural gas (LNG) exports. Surprisingly, the DOE recently approved an application from a Cheniere Energy subsidiary called Sabine Pass Liquefaction to export LNG — and might approve up to seven additional export applications.

Democratic Rep. Ed Markey is not happy about that. Yesterday, he sent a letter to Energy Secretary Steven Chu to effectively ask him: What the heck do you think you’re doing? Markey is concerned that increased natural gas exports could lead to higher natural gas prices in the U.S. and that those prices, in turn, could make natural gas less attractive as a “bridge fuel” between “dirty” energy sources like coal and “clean” sources like wind and solar.

He’s right: Increased exports probably would in all likelihood lead to higher natural gas prices in the U.S. But those higher prices would actually just serve to make more attractive the alternative energy sources he’s so fond of subsidizing.

Markey’s argument to restrict natgas exports is weak for two other reasons, too. In the first place, Markey and other environmentalists love to rail against China for its own export restrictions on raw materials and rare earth elements used in green technology products. To now advocate restrictions himself is hypocritical, to say the least. In the second place, natural gas companies have taken enormous risks to produce more natural gas. They developed the new technologies that enabled them to drill in shale formations, they’ve drilled the wells and they’ve produced the fuel. All that cost them something. They could have left us to become a natural gas importer, which we were on track to be in the 1990s. Instead, they set us up to be the Saudi Arabia of natural gas. Limit their ability to earn a profit by restricting exports — and what will happen? They’ll have no incentive to continue to develop the fuel. All those natgas-based jobs in Pennsylvania and elsewhere? Gone.

Luckily, at this point, not allowing additional exports is just a debate — but it’s still chilling that Democrats consider discussion of this idea needful. The rest of us can see clearly that intentionally limiting natural gas exports is counterintuitive and contrary to the free market principles that ensure the most efficient allocation of energy resources.


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