US LNG Exports are Good for America and the World
This week the U.S. House of Representatives takes up ‘The North American Energy Security and Infrastructure Act.’ If passed, it’s supporters claim it would re-stock the Strategic Petroleum Reserve, modernize America’s energy infrastructure, and streamline the approval process for LNG export projects. Lawmakers may also vote on a repeal of the 40 year old ban on crude oil exports.
The White House has promised to veto the legislation.
The administration has cited a number of reasons for its opposition, ranging from concerns about weakening environmental regulations to the bill’s potential to undermine ongoing infrastructure projects. However, there is one objection in particular that merits further consideration. Namely, that the bill would “unnecessarily curtail [the DOE’s] ability to fully consider whether natural gas export projects are consistent with the public interest.” Of course, latent in this criticism is the assumption that a number of export projects are not in fact in the public interest. Yet, it’s become increasingly difficult to see how.
First of all, increased exports would provide needed relief for the US natural gas industry. In the short-term, the EIA expects continued production growth due to increased drilling efficiency, in the medium-long run we should expect the current glut of gas to take its toll on production. The consequence of this will be industry consolidation and declining production. Allowing US producers expanded access to foreign markets would help to insulate them from such adverse consequences, thus helping to ensure the survival of America’s energy renaissance.
The US has a clear national interest in establishing a global, liquid market in LNG. Both Japan and the European Union depend on imported natural gas, and in many parts of the world the natural gas market remains a volatile and imperfect one. This is particularly true when it comes to Eastern Europe, where Russia has sought to use its natural gas supply as a geopolitical weapon. Not only would LNG exports to these countries benefit American producers, but it would help to insulate our allies from hostile actors. Of course, this would happen anyway if both TPP and TTIP were approved, because natural gas exports are already expedited for FTA counties. As a supporter of these deals, the President presumably knows this. It’s difficult to understand why he should support the trade deals while being seemingly disinterested in one of their biggest benefits.
Finally, while some may have reservations about the United States supplying global consumers with more fossil fuels, natural gas is significantly cleaner than its alternatives. This is particularly true in a post-Fukushima world where nuclear power seems to be off the table for some governments. Increased American exports and production of natural gas should serve to undermine the consumption of other, dirtier fuels.
The North American Energy Security and Infrastructure Act’ is not a perfect piece of legislation, and the President wouldn’t necessarily be wrong to veto it. Yet, to overlook the benefits of expediting LNG exports would be to miss a tremendous opportunity. If the President doesn’t want to pass this act, then he should request that Congress send him a stand-alone bill calling on the DOE to streamline natural gas exports. The economic, political and environmental arguments for doing so are clear.