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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About the Author

 

Benjamin
Zycher
  • Benjamin Zycher is the John G. Searle Chair and a resident scholar at the American Enterprise Institute (AEI), where he works on energy and environmental policy. He is also a senior fellow at the Pacific Research Institute.

    Before joining AEI, Zycher conducted a broad research program in his public policy research firm, and was an intelligence community associate of the Office of Economic Analysis, Bureau of Intelligence and Research, US Department of State.  He is a former senior economist at the RAND Corporation, a former adjunct professor of economics at the University of California, Los Angeles (UCLA) and at the California State University Channel Islands, and is a former senior economist at the Jet Propulsion Laboratory, California Institute of Technology.  He served as a senior staff economist for the President's Council of Economic Advisers, with responsibility for energy and environmental policy issues.

    Zycher has a doctorate in economics from UCLA, a Master in Public Policy from the University of California, Berkeley, and a Bachelor of Arts in political science from UCLA.

  • Email: benjamin.zycher@aei.org
  • Assistant Info

    Name: Regan Kuchan
    Phone: 202.862.5903
    Email: regan.kuchan@aei.org

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