The reason why natural-gas exports are still even a “question”

posted at 1:51 pm on January 15, 2013 by Erika Johnsen

The U.S. government is perfectly capable of recognizing the widespread wealth-generating benefits of free trade and allowing exports in certain areas of the economy (just take a closer look at the government’s involvement in the agricultural sector for plenty of examples), but for some strange reason, the current energy-company clamor of applications for obtaining permits to further export liquified natural gas is persistently encountering some fierce resistance.

And when I say “strange reason,” what I really mean is… Mark Perry explains at AEI (h/t Tim Carney):

It’s somewhat ironic (or timely) that on the day after public choice economist James Buchanan died, a classic, textbook example of rent-seeking emerged from a group called “America’s Energy Advantage,” which might be more appropriately called “America’s Self-Interested Energy (Natural Gas) Advantage for Some Big Private Chemical and Steel Companies.” …

Thanks to advanced drilling technologies (hydraulic fracturing and horizontal drilling), and private risk-taking investors, private oil and gas companies tapped into an ocean of shale gas in America that by some estimates is enough to supply our natural gas demand for the next 100 years. …

But here’s where rent-seeking enters the picture.  Energy-intensive US manufacturing companies like Dow Chemical, Nucor (the country’s largest steel producer) and Alcoa have benefited significantly from historically low natural gas prices, and want to restrict natural gas exports through the political process, to protect their lower energy prices and higher profits.

In a nutshell, these companies are playing the long-disproved and economy-damaging protectionist card, using up what could otherwise be productive resources in order to lobby the government for political favoritism that will only ‘benefit’ their niche interests.

There’s still some debate about whether or not exporting natural gas will actually be worthwhile in the long term, but the point is, that’s not for the federal government to dictate — if energy companies find it profitable to take their goods to the global market, they should be free to do so. The free-market logic, the potential geopolitical benefits (i.e., breaking Russia’s hold over gas supplies), and while I’m holding out hope that the Obama administration will ultimately decide on at least partially freeing up the industry more, the opportunities for jobs and economic growth are all clearly there — it’s only political, big-government rent-seeking holding us back.

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If government is going to be arbiter of fair and lawful competition, long as RICO, monopoly, and other LARGE laws aren’t being violated, then government is WAY too large.

Liam on May 21, 2013 at 8:44 PM

The real question, of course, is why DC — and other cities like it — even have so much innovation- and freedom-crushing red tape

How else are the bureaucrats going to keep the bribe money coming?

malclave on May 21, 2013 at 8:48 PM

How else are the bureaucrats going to keep the bribe money coming?

malclave on May 21, 2013 at 8:48 PM

That pretty much covers the topic.

Liam on May 21, 2013 at 8:53 PM

How do you pronounce this: womp

Whoomp (as in Whoomp, there it is)? Wahmp (rhymes with pomp)? something else?

cptacek on May 21, 2013 at 8:59 PM

Uber is a FANTASTIC company… naturally, it and the innovation it represents would be antithetical to the current oppressive environment this crony-based government has spawned…

dpduq on May 21, 2013 at 9:03 PM

simply provide customers with the option of hailing a taxi with a smartphone app is being put through the ringer in the nation’s capitol, too.

I hate to throw the grammar Nazi flag, but the word I bolded above should be wringer.

Gator Country on May 21, 2013 at 9:13 PM

How do you pronounce this: womp

Whoomp (as in Whoomp, there it is)? Wahmp (rhymes with pomp)? something else?

cptacek on May 21, 2013 at 8:59 PM

Woah! Erika’s quite the womp rat!

KS Rex on May 21, 2013 at 9:44 PM

Wringer is a ringer for “ringer”

Now if you’ll excuse, I have clothes to dry.

wolly4321 on May 21, 2013 at 9:45 PM

The real question, of course, is why DC — and other cities like it — even have so much innovation- and freedom-crushing red tape

And then those cities wonder out loud why they continually suffer ‘brain drains’ when the best and brightest flee for greener pastures.

It’s not rocket surgery.

Myron Falwell on May 21, 2013 at 9:56 PM

The real question, of course, is why DC — and other cities like it — even have so much innovation- and freedom-crushing red tape that diverts so much of what could otherwise be everybody’s profitable time and resources into fighting for permission to operate and completely legitimate and highly efficient business that creates real jobs and improves people’s lives. You’d think that small businesses daring to threaten the established order were doing something illicit, what with all the hoops they have to jump through these days — and that is no way to grow any kind of economy, be it on a micro- or macro-level.

Just like the medieval guilds, the purpose is to protect the existing businesses from aggressive competition.

And yes, this undermines the whole free enterprise system. Fortunately, the startups just view it as one more obstacle to get past, and manage anyway. But it’s still a waste of time and money.

There Goes the Neighborhood on May 22, 2013 at 10:26 AM

Had the opportunity to use Uber’s sedan service in L.A. a few weeks ago.

As soon as the service was ordered I knew that my car was 4 minutes away. I watched on the screen as it got closer and closer. When it hit 1 minute, I saw a black sedan on the opposite side of the street signaling to make a u-turn.

Contrast this with a year earlier when I called for a taxi in order to make the exact same trip. I was told that they were busy but they’d have someone there in 10 minutes. 15 minutes later I called and was told that someone would be there in 10 minutes. Another 15 minutes later I called and was told dispatch had sent someone and if they weren’t there in 5 minutes I should give them another call. 10 minutes after that I flagged down a passing cab and they got my business instead.

The Uber sedan service was $90 with tip. The taxi was $110 with tip.

If Uber wants to extend their business into the taxi realm (and they plan to keep the same level of service), it’s nothing but a boon to the residents of the cities they are operating in.

JadeNYU on May 22, 2013 at 11:02 AM

But Uber argues that the the taxi regulations issued last week, which go into effect June 1, would require it to link its payment system to the payment providers integrated into the new meters that taxis will begin installing this summer.

Wonder how much the preferred payment providers are paying DC?

unclesmrgol on May 22, 2013 at 11:43 AM