Ed Markey Wants to Block Energy Exports

by Brian McGraw on January 5, 2012

in Blog

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The shale-gas revolution in the United States has led to massive increases in natural gas production, increasing our domestic supply and reducing prices. While global trade in natural gas exists, the infrastructure and volume is low enough such that there isn’t much of a single global price for natural gas (unlike oil, where there are a few prices which tend to stick close to one another). You can look at spot prices for various countries here, note the large disparity.

The shale gas revolution in the U.S. has been so enormous that infrastructure that was built with the expectation of importing natural gas is now being switched to export natural gas to other countries. Congressman Ed Markey (D-Mass.) is apparently concerned that producers of natural gas in the U.S. would like to export some of the excess to take advantage of higher prices in other parts of the world. Yet as Markey so often likes to point out, America has in recent decades consumed more oil than we produced. If other countries had decided 40 years ago to shut off their oil exports to keep domestic prices as low as possible, America would be a much different place today (and much worse off).

Believe it or not, low energy prices are good for countries other than just the United States. Trade helps make this possible, so its odd that Markey would want to restrict natural gas exports:

I am worried that exporting America’s natural gas would raise energy costs for American consumers, reduce the global competitiveness of U.S. businesses, make us more dependent on foreign sources of energy, and slow our transition away from fossil fuels.

The rest of the letter can be read here. This simplistic — and incorrect — protectionist argument could be rattled off for hundreds of domestic industries. If the world listened, everyone would be much worse off. Markey argues that exporting natural gas might raise energy costs for America and reduce our competitiveness (presumably in manufacturing and related industries heavily reliant on the price of energy). This might be true, but as Markey notes later, the end result might not change significantly as domestic production can also increase (if Markey doesn’t shut down hydraulic fracturing).

Finally, Markey notes that natural gas is a “bridge fuel” on the way to a world which Markey envisions as running on only intermittent energy sources such as solar and wind power. He sees the low price of natural gas as responsible for the closure of numerous coal plants, which to some extent is true. However, even if you accept Markey’s premise that this is a good thing, exporting natural gas from the United States might very well displace coal powered generation in other countries. This wouldn’t make Markey and his band of guilt-ridden environmentalists feel good about the U.S. “doing its part,” but it would still wouldn’t increase carbon dioxide emissions on net while allowing for more efficient trade in global energy markets.

Oh, and exporting natural gas would help with our trade deficit, which Markey also yammers on about when talking to different interest groups.

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