The export of American natural-gas reserves to allies in Asia, Europe and elsewhere is under consideration by Congress again this week. Approvals for new liquefied natural gas (LNG) export facilities are on hold indefinitely, but the economic and political benefits for the United States should it become a top exporter of LNG are too great to ignore.
Chief among them are geopolitical energy security and local economic benefits to communities throughout the U.S. Several European and Asian nations rely on LNG imports for their energy needs. The most prominent is Japan, which has increased its natural-gas imports in the wake of the Fukushima nuclear disaster. Exporting LNG to American allies such as Japan will bring these countries increased energy security and potentially weaken the stranglehold Russia has traditionally held on those energy markets.
Exporting LNG would also be an incredible economic boon here at home, creating thousands of new jobs in some of the areas hardest hit by the economic recession. A new study conducted by the Small Business & Entrepreneurship Council showed that jobs in the oil-and-gas industry have grown an enormous amount from 2005 to 2010 — by 27.6 percent in the oil-and-gas extraction sector; by 15.1 percent in the drilling oil and gas wells sector; by 38.5 percent in the support sector for oil-and-gas operations; by 47 percent in the oil-and-gas pipeline and related structures construction sector; and by 62 percent in the oil-and-gas field machinery and equipment manufacturing sector. The regional benefits have also resulted in economic benefits to states where natural-gas production had increased — including Arkansas, Colorado, Louisiana, North Dakota, Oklahoma, Pennsylvania, Texas, Utah, West Virginia and Wyoming.
These impressive employment numbers will only grow if the Department of Energy gives companies the green light to begin construction of liquefaction plants needed to export LNG. The economic reality today is fairly simple: Though there’s been a massive spike in jobs and investment from shale gas development in recent years, the economic benefits from natural-gas production will not be fully reached until and unless the export potential of LNG is realized. Exporting LNG creates a new market for natural gas and will allow production and job growth to continue. As Raymond Keating, chief economist at the Small Business & Entrepreneurship Council, said earlier this month, “Anytime you have an expanded opportunity to meet a larger market … that’s certainly going to be beneficial and continue this growth trend.”
With the Sabine Pass liquefaction plant in Louisiana poised to come online in 2015, the heady hopes of the United States becoming a real player in international LNG markets is becoming more and more of a reality. Indeed, a recent report from Moody’s predicts that the United States will become “one of top exporters” in the next five years.
Unfortunately, there remains an effort afoot to deny LNG exports before they even have a chance to get going. Opponents of exports have complained that exporting LNG will increase the costs of natural gas, which is a major input good for chemical exports. This line of reasoning is a thinly veiled attempt to limit exports to pad their bottom line at the expense of the larger economy and good-paying American jobs.
In this debate, the policymakers in Washington need to take into account both domestic economic and international considerations. Looking at the economic and geopolitical benefits, it is clear the Department of Energy needs to lift the moratorium on permitting LNG export facilities and allow the free market to work. It’s time to start looking locally — and thinking globally.