When it comes to exports of liquefied natural gas, U.S. law is crystal clear: The Natural Gas Act directs federal authorities to issue an order approving any application to import or export natural gas “unless, after opportunity for hearing, it finds that the proposed exportation or importation will not be consistent with the public interest.”
This legal presumption in favor of allowing exports is important to keep in mind because a raft of studies and economic analyses has concluded that greater international trade in natural gas would benefit consumers and the U.S. economy. (It is worth noting that several of these studies were commissioned by the federal government.)
It has long been known that increasing free trade in energy contributes to GDP growth and job creation.
Now it is time to add another study to the mountain of evidence supporting LNG exports.
The latest of these reports was conducted by Rice University’s Baker Institute and Oxford Economics. The U.S. Department of Energy, which commissioned the study, released it at the end of 2015, which leads me to hope it prompts some New Year’s resolutions in Washington to expedite the pace of approvals for new export facilities.
The Baker/Oxford study reaffirms the notion that increased trade serves the public interest. In fact, it found that increasing American exports of natural gas could grow the U.S. economy on average by between $7.7 billion and $20.5 billion every year over the period 2026 to 2040.
Exports would create between 9,600 and 35,200 jobs annually over the same period.
Similar analyses from the Brookings Institution, Manhattan Institute, the National Association of Manufacturers, the Small Business & Entrepreneurship Council, and the U.S. Chamber of Commerce, and others all point to the same simple conclusion: More exports = more benefits.
That’s clear. Far less clear is why the U.S. Energy Department has constructed an elaborate export approval process the effect of which has been to leave a number of applications hanging in limbo.
This includes a proposed project on the Gulf Coast involving ExxonMobil: Golden Pass Products, a potential $10 billion investment.
Golden Pass submitted its application three years ago, yet is still waiting for federal authorities to act before it can move forward. Meanwhile, as has been pointed out in Perspectives before, the window of opportunity to capitalize on global commercial opportunities is closing.
At the end of 2015 Washington acted to end the federal ban on exporting American crude oil. That was a common-sense decision that both affirms the nation’s free-market principles and underscores the importance of free trade in energy for increasing economic opportunity and growth.
Why not apply the same reasoning to LNG?