A new study from the American Council for Capital Formation (ACCF) is calling for the Department of Energy (DOE) and Federal Energy Regulatory Commission (FERC) to speed up the permitting process to authorize natural gas exports. An even better solution is for Congress to remove the DOE’s authority for authorizing natural gas export permits and allow the states to control the environmental review and permitting process for natural gas export facilities.
Allowing for increased natural gas exports would be a huge boon for the American economy as it would expand U.S. market opportunities. According to the analysis from ACCF, expanded natural gas exports would, in the time frame 2016–2035:
- Increase employment by between 73,100 and 452,300 jobs;
- Increase manufacturing job growth by between 7,800 and 76,800; and
- Grow U.S. gross domestic product by $15.6 billion to $73.6 billion per year on average.
The study also includes increased employment for the refining, petrochemicals, and chemicals job sector and projects natural gas price increases of only about $0.32 to $1.02 per million British Thermal Units on average. This is important because one of the special interest groups raising concerns about increased natural gas exports is chemical companies for fear that it will raise their costs.
Natural gas exports would raise domestic energy prices, although as projected by the ACCF study and other studies, that price increase would be small because the natural gas shipped overseas represents a relatively small share of the pie. Further, those higher prices would act as incentives for more exploration and production, offsetting some of the price increase or even keeping prices as low as they are now, since the gas is still profitable to produce at a low price in some regions of the country.
Providing other countries with cheaper energy would not only lower the prices of products that the U.S. imports (because foreign businesses could make the products more cheaply); it would also promote economic development in those countries, encouraging them to import more American goods. Even the sectors allegedly hurt by exports would experience net gains from more natural gas exports.
To export natural gas, a company must go through an environmental review and permitting process from the FERC but also obtain approval from the DOE. A facility is automatically authorized if the recipient nation has a free trade agreement (FTA) with the U.S. If the importing country does not have an FTA, the DOE must then publish the notice in the Federal Register for a comment period and ultimately determine if exporting from the facility is in the public’s interest. So far, the DOE has approved two of 20 applications to export natural gas to non-FTA countries.
As demonstrated by the ACCF study as well as a DOE-commissioned study, it is clear that exporting natural gas provides overwhelmingly positive net economic benefits and would provide much-needed jobs.
What isn’t clear is why the DOE is involved in the process at all. Natural gas should be treated as any other good traded around the world. Congress should remove the DOE from the export-permitting process and lift restrictions on natural-gas-recipient countries.
