Exporting Natural Gas: Is it Beneficial?

NCPA May 16, 2013

U.S. natural gas companies are now reaching the point that they can provide enough gas for U.S. consumption and create extra profit through exports to other countries. This boom in production is one of the first real steps that the United States has been able to take toward energy independence, but some politicians argue that this might create price increases for Americans attempting to buy natural gas, says Steve Chapman, a columnist and editorial writer for the Chicago Tribune.

• Current law requires the federal government to approve all sales of U.S. gas abroad.
• Among those to express doubts of the benefits of U.S. companies exporting natural gas is President Barack Obama who claims, "I've got to make a decision -- an executive decision broadly about whether or not we export liquefied natural gas at all."

Some congressional Democrats are discouraging him from embracing the exportation of natural gas because of the possible negative impacts it could have on major U.S. corporations' abilities to buy the gas.

• Sen. Ron Wyden of Oregon warns that "major gas consumers could find themselves hit hard with energy price hikes and forced to sideline job-creating efforts."
• Sen. Debbie Stabenow of Michigan claims that it "makes no sense" to ship U.S. homegrown supplies abroad.

These responses made by congressional Democrats are quite unusual compared to U.S. politicians' typical thought process that reducing imports and promoting exports is good. Some senators believe that letting natural gas leave U.S. soil will sap Americans' ability to use the commodity. Some corporations oppose natural gas exports because they claim that it would become an unfettered export.

• Among the corporations are Dow Chemical, Alcoa, Nucor and Eastman Chemical, which argue that selling American natural gas to Americans is good but selling it to foreigners is bad.
• These companies fret that foreign buyers will bid up the price of something they buy in great quantity.
• Dow complains that exports could "disrupt natural gas supply and pricing."
• It has not, however, objected to the "disruptions" that in the past five years have increased supply while slashing prices by two-thirds.

While congressmen and corporations are worried about prices of natural gas inflating, it is not clear that allowing sales abroad would have a substantial impact on American purchasers of the commodity. The sale of natural gas to foreign companies or foreign government will benefit the U.S. economy and U.S. exports, and put the United States back on the map for economic growth.

Source: Steve Chapman, "Democrats Are Holding Energy-and Prosperity-Captive," Reason Magazine, May 9, 2013.