Next week the House Energy and Commerce Committee will consider a bill, H.R. 6, to open up new markets for natural gas exports. Currently, natural gas exports (in the form of liquefied natural gas or LNG) are restricted to the handful of countries with which the U.S. has a free trade agreement. In order to export LNG to other countries, applicants must first pass a public interest review and the process is marked by extensive delays.
The government-imposed export restrictions are hampering the growth of the domestic natural gas industry, even as new technology makes more and more resources available. When domestic consumption of natural gas is flat and natural gas prices and consumption are high abroad, it makes perfect economic sense to take our abundant supply to the global demand. Our neighbors in British Columbia are doing so and expect to see 4 percent economic growth over the next few years. Increased LNG exports would not only bolster the profitability of domestic natural gas production, but also bring with it new jobs and economic development – two things our struggling economy desperately needs.
Writing in at TheHill.com today, Raymond Keating, chief economist of the Small Business and Entrepreneurship Council explained:
According to the Center for Liquefied Natural Gas, each new terminal created to ship LNG overseas could generate more than $10 billion in investment for the U.S. economy, including wages and purchase orders for equipment. A single project will likely generate more than $10 million per year in new tax revenue at the federal, state and local levels. For good measure, it’s estimated that very $1 billion of LNG produced creates about 5,000 construction and manufacturing jobs.
So, while it’s still frustrating that government is still standing in the way of an industry’s success, what’s even more surprising is how U.S. taxpayer-backed dollars are being used to prop up the LNG industries of other nations even as our own producers are stymied by our government.
When it came to light that recent Administration-imposed sanctions towards Russia had put the kibosh on an Export-Import Bank (Ex-Im Bank) financing deal for the Russian OAO Novatek Yamal LNG project, I wondered – how many other LNG export projects do we support in other countries? A quick search turned up quite a few.
- $1 billion for LNG industries in the Philippines
- $1.8 billion for the BG Group in Queensland, Australia
- $3 billion for Australia Pacific LNG Project
- $3 billion to ExxonMobil to develop LNG in Papua New Guinea
Robust competition and free trade dictate that competitors to U.S. natural gas will and should develop their own energy resources. But the federal government shouldn’t be propping up direct competitors for U.S. products using cheap, taxpayer-backed credit. Not when our own producers are not allowed to compete on that playing field. This is doubly true when the recipients of Ex-Im Bank largess are giant corporations more than capable of securing their own private capital.