Limitations on natural gas exports and the Brownsville U-Turn

Article Highlights

  • Oh what a tangled web we weave when first we practice to obtain favors from the federal government.

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  • AEA and its members argue that they are doing the economy a favor, and actually may believe that they are doing themselves one as well. They are wrong on both counts.

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A bit of history demonstrates the folly of recent calls to limit natural gas exports.

Oh what a tangled web we weave when first we practice to obtain favors from the federal government. That is the large, unexplored reality lurking between the lines of a recent article in the New York Times on the infighting between the firms and industries in support of expanded natural gas exports as determined by market forces (free trade) and those in favor of limitations, most prominently America’s Energy Advantage (AEA), an industry group that favors free trade for its own members’ products but protectionism for natural gas, one of the central inputs produced by others.

Ask not what the federal government can do for AEA. Ask instead how an export limit would be implemented. AEA calls for limits below the export levels that market forces would yield, or as its website puts it, a careful consideration of the economic consequences of “unfettered” natural gas exports.

Let us oblige them. Limits on gas exports would yield lower gas prices in the United States than overseas (and thus lower production costs and a competitive advantage for AEA’s membership). Higher international prices mean that the right to export gas would be valuable in both pecuniary and political terms: the federal government would have to determine not only the “right” export level but also who would be given the valuable export rights. In short, it is the feds that would pick the winners. As that noted political philosopher and former Illinois governor Rod Blagojevich once said, “… it's @#$%*&! golden. I'm not just giving it up for @#$%*&! nothing."

Read the full article at The American.

 

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Benjamin
Zycher

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