The Edmond Sun

Opinion

December 16, 2013

For higher costs, go ahead and restrict exports

WASHINGTON, D.C. — On his recent trip to Warsaw, Secretary of State John Kerry heard arguments for expanding U.S. natural gas exports to Poland. Polish officials made the case that letting liquefied natural gas flow from the United States to Poland would benefit European economies as well as the environment.

When it comes to lifting restrictions on gas exports, U.S. officials shouldn’t need convincing. If policymakers want to continue denying our economy the benefits of free trade, they should be the ones to explain why.

By selling more of our natural-gas supplies abroad, we Americans will increase the number of goods and services that we import, thereby improving living standards here at home. And despite claims to the contrary, boosting gas exports actually will drive down domestic energy costs over the long-term. Officials seeking to restrict natural-gas exports are preventing the United States from realizing the full rewards of the current domestic energy boom.

Since 2007, the widespread adoption of hydraulic fracturing techniques has increased America’s shale gas production sixfold. And in the next five years, domestic production is expected to accelerate, according to the International Energy Agency.

The dramatic rise in domestic gas extraction has made our country the largest producer of an energy source that is increasingly in demand across the world. LNG prices in Europe, for example, are roughly three times higher than here in the United States, while Asia pays more than four times as much for the resource. Both regions are eager to buy America’s gas supplies. Yet, for reasons that are fantastical at best, U.S. producers still face serious barriers to selling overseas.

In particular, energy firms looking to export to countries who lack a free-trade agreement with the United States require approval from the Department of Energy. And while the DOE has granted four such approvals in the past few years, more than 20 others remain under review.

Those opposed to expanding exports argue that selling more natural gas to foreign countries will drive up energy costs for Americans. Sen. Ron Wyden has argued that, before the DOE approves anymore LNG exports, the agency must first “prove to American families and manufacturers that these exports will not have a significant impact on domestic prices.”

This is crazy talk.

Wyden, who said this in September, must have missed the DOE-commissioned study from last year detailing the benefits of gas exportation. The report concludes that “the U.S. was projected to gain net economic benefits from allowing LNG exports. Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased.”

This conclusion is hardly surprising, as obstructing trade is always an economic loser. To artificially restrict exports is to artificially reduce export earnings and, thus, to decrease the volume of imports that can be purchased. If the United States can’t sell its most valuable natural resources to those most eager to buy them, we’ll be less able to import the foreign-made products we rely on the most. The result will be fewer low-cost electronics, cars, clothes and countless other imported goods that significantly improve our standard of living.

As for the threat of higher domestic energy prices, this too has little basis in economic reality. The only way America’s natural-gas supplies will remain high is if businesses continue to invest heavily in the costly process of production. By limiting access to the global market, U.S. officials weaken the incentive to develop domestic gas resources. And as gas supplies fall, prices will rise. We don’t need a government study to tell us that, if Apple could only sell its products in a handful of federally approved countries, Americans would pay a lot more for iPhones and MacBooks. Natural gas is no different.

What’s more, it’s simply backwards that the burden of proof is on businesses looking to sell their product to willing customers, rather than on those wishing to impose protectionist policies. The dangers of trade restrictions have been readily apparent since the days of Adam Smith, who warned that “prohibition of exportation limits the improvement and cultivation of the country to what the supply of its own inhabitants requires.”

Opponents of natural-gas exports have abandoned basic economic logic for an ill-reasoned hunch about energy costs. In doing so, they stand in the way of the enormous economic benefits that come with being a world leader in energy production.

DONALD J. BOUDREAUX is a senior fellow at the Mercatus Center and a professor of economics and former economics-department chair at George Mason University. He holds the Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center.

1
Text Only
Opinion
  • St. Louis Post-Dispatch: Why poverty across the world matters to Americans

    A child starving in South Sudan should matter to Americans. That was the message delivered last week by Nancy Lindborg, whose job at the U.S. Agency for International Development is to lead a federal bureau spreading democracy and humanitarian assistance across the world.
    That world has reached a critical danger zone, with three high-level crises combining military conflict with humanitarian catastrophes affecting millions of innocents in Syria, the South Sudan and the Central African Republic.
    But back to that child.

    April 18, 2014

  • Government leadership complicit in overfilling prisons

    One of the thorniest problems facing any society is the question of what to do with transgressors. Obviously, the more complicated a culture becomes, the more factors come into play in trying to figure out what to do with those who choose not to “play by the rules.”

    April 18, 2014

  • My best days are ones normal people take for granted

    It is a weekend for working around the house. My fiancee, Erin, and I have the baby’s room to paint and some IKEA furniture to assemble. I roll out of bed early — 10:30 — and get into my wheelchair. Erin is already making coffee in the kitchen.
    “I started the first wall,” she says. “I love that gray.” Erin never bugs me about sleeping late. For a few months after I was injured in the Boston Marathon bombings, I often slept 15 hours a day. The doctors said my body needed to heal. It must still be healing because I hardly ever see 8 a.m. anymore.

    April 18, 2014

  • Instead of mothballing Navy ships, give them to our allies

    A bitter debate has raged in the Pentagon for several months about the wisdom of taking the nuclear aircraft carrier George Washington out of service to save money. The Washington, at 24 years old a relatively young vessel, is due for a costly refit, a routine procedure that all of the 11 large carriers in service undergo regularly.

    April 18, 2014

  • The pessimist’s guide to grizzly bears and Earth Day

    This coming Friday, to “celebrate Earth Day,” the Walt Disney Co. will release one of those cutesy, fun-for-all-ages, nature documentaries. “Bears” is about grizzly bears.
    The trailer says, “From DisneyNature comes a story that all parents share. About the love, the joy, the struggle and the strength it takes to raise a family.”
    Talk about your misguided “Hollywood values.” I previously have acknowledged a morbid, unreasonable fear of grizzly bears, stemming from a youth misspent reading grisly grizzly-attack articles in Readers Digest. This fear is only morbid and unreasonable because I live about 1,500 miles from the nearest wild grizzly bear. Still. ...

    April 16, 2014

  • Digging out of the CIA-Senate quagmire

    Last week, the Senate Intelligence Committee, led by Sen. Dianne Feinstein, D-Calif., voted to declassify parts of its report on the CIA’s rendition, detention and interrogation program. The White House, the CIA and the Senate still have to negotiate which portions of the report will be redacted before it is made public. But this is an important step in resolving the ugly dispute that has erupted between the intelligence committee and the intelligence agency.
    The dispute presents two very serious questions. Was the program consistent with American values and did it produce valuable intelligence? And is effective congressional oversight of secret activities possible in our democracy?

    April 15, 2014

  • Los Angeles Times: Congress extend jobless benefits again

    How’s this for irony: Having allowed federal unemployment benefits to run out in December, some lawmakers are balking at a bill to renew them retroactively because it might be hard to figure out who should receive them. Congress made this task far harder than it should have been, but the technical challenges aren’t insurmountable. Lawmakers should restore the benefits now and leave them in place until the unemployment rate reaches a more reasonable level.

    April 14, 2014

  • Many nations invested in Israel

    Former Israeli Ambassador to the United States Yoram Ettinger recently spoke to a gathering at the Chabad Center for Jewish Life and Learning in Oklahoma City. The event began with a presentation by Rabbi Ovadia Goldman, who told the attendee that the  upcoming Jewish holiday of Passover was an occasion for them to embrace the children of God, which is all of humanity.

    April 14, 2014

  • Coming soon: More ways to get to know your doctor

    Last week, the federal government released a massive database capable of providing patients with much more information about their doctors.
    The Centers for Medicare and Medicaid Services, the government agency that runs Medicare, is posting on its website detailed information about how many visits and procedures individual health professionals billed the program for in 2012, and how much they were paid.
    This new trove of data, which covers 880,000 health professionals, adds to a growing body of information available to patients who don’t want to leave choosing a doctor to chance. But to put that information to good use, consumers need to be aware of what is available, what’s missing and how to interpret it.

    April 14, 2014

  • HEY HINK: Hateful bullies attempt to muffle free speech

    Hopefully we agree it should be a fundamental right to voice criticism of any religion you wish. And you should have the right to sing the praises of any religion you choose. If criticism of religion is unjust, feel free to make your best argument to prove it. If criticism is just, don’t be afraid to acknowledge and embrace it. If songs of praise are merited, feel free to join in. If not, feel free to ignore them. But no American should participate in curbing free speech just because expression of religious views makes someone uncomfortable.

    April 11, 2014

Poll

Do you agree with a state budget proposal that takes some funds away from road and bridge projects to ramp up education funding by $29.85 million per year until schools are receiving $600 million more a year than they are now? In years in which 1 percent revenue growth does not occur in the general fund, the transfer would not take place.

Agree
Disagree
Undecided
     View Results