The White House and Democrats in Congress need to come to grips with the nation’s “energy problem.”
We have huge deposits of oil and natural gas both on land and offshore, but political considerations present serious impediments to their full production and use.
Take, for example, the huge increase in natural gas output, largely the result of advances in exploration and production technologies. With the United States now self-sufficient, producers want to increase exports of Liquefied Natural Gas or LNG. That requires government approval.
Benefits would be considerable: more U.S. jobs created to find and produce natural gas and build LNG export facilities, increased revenues to federal and state governments, and a reduction in the nation’s trade deficit, and reasonably priced LNG for struggling economies in India, Japan and Europe.
The Department of Energy has approved a few applications for LNG exports to countries with which we have free-trade agreements, but there is a backlog of requests to export to other nations.
President Obama told Meet the Press that “America can become an energy exporter,” but he linked that with “environmental challenges.”
The chairman of the Senate Committee on Energy and Natural Resources, Oregon’s Ron Wyden, an influential voice on energy issues, has adopted a protectionist stance and is urging the Obama Administration to limit LNG exports. That would be a major economic policy blunder.
First, we should not pass up an opportunity to create thousands of jobs for American workers. With the huge surge in natural gas production in the Marcellus Shale and other shale deposits across, increasing exports offers a rare chance to create more well-paying jobs.
Each $1 billion in exports generates more than 6,000 new jobs, according to the Office of the U.S. Trade Representative. In the context of LNG that’s 75,000 to 150,000 new American jobs in addition to the nearly 2.5 million jobs a recent economic study estimates natural gas development could create by 2035.
Second, we would forego an enormous amount of tax revenue. It’s estimated that just one LNG export terminal could create nearly $11 million in new tax revenue every year for federal, state and local governments and demand for natural gas is growing.
Third, disapproval of export licenses could alienate a key ally. In the aftermath of the Fukushima nuclear accident, Japan is counting on imports of U.S. LNG to replace nuclear power and help revive its economy.
Fourth, American geopolitical strategy would be undermined. Most energy experts believe we have the capacity to rival Russia as the world’s biggest natural-gas producer.
Over time, LNG exports would yield a shift in global power from Russia to consumers such as Germany, Ukraine, China and India, which would benefit from a more diverse and lower-cost gas supply.
Finally, there is no need to fear harm to U.S. manufacturers or consumers generally. The Energy Information Administration projects that between 2015 and 2035, LNG exports would add a modest 3-9 percent to consumer gas bills and 1-3 percent to electricity bills, depending on the volume of exports.
A decade ago, shale gas accounted for 2 percent of U.S. natural gas production. Today it is nearly 35 percent and growing. The boom has helped reinvigorate the petrochemical and steel industries, which have reopened mills and factories, adding billions of dollars in value to the economy.
The Obama Administration should abjure protectionist policy and allow free trade in the LNG global marketplace. In doing so it will be supporting the creation of thousands of American jobs, strengthening the U.S. energy market, generating new revenue for governments at all levels, and helping to improve the global economy.
Banks is a retired communications executive with experience in the coal, oil and natural gas industries.