As Congress returns to work and focuses on a Ukraine aid package, exporting liquefied natural gas (LNG) is getting all sorts of attention these days, and deservedly so. Liberalizing America’s energy markets by lifting restrictions on export capabilities should be a key component of Congress’s response.
Over the weekend, The Washington Post editorial board made the case for freeing up opportunities for U.S. exports that would diversify global energy markets and diminish Russia’s ability to use energy for leverage. The Post sums up the argument nicely:
The economic case for allowing natural gas exports is compelling on its own. Doing so would bring money into the country and uphold the vital principle that energy resources should flow freely around the globe, making the markets for the fuels the world economy needs as flexible and robust as possible.
We’ve been making this argument well before the crisis in Crimea, as exporting natural gas would expand market opportunities for American companies to foreign countries where the price of natural gas is much higher. In fact, Cheniere Energy’s liquefaction project in Louisiana, expected to be online by the end of next year, has already entered into long-term contracts to sell its gas to Spain, Britain, South Korea, and India.
Increasing opportunities for more companies to export natural gas will reduce opportunities for Russia to hold Europe hostage by cutting off its energy supplies. In fact, it may benefit Europe further if Vladimir Putin has to slash natural gas prices to compete with international markets.
The good news is that Congress is listening. Today, the Senate Energy and Natural Resources Committee is holding a full committee hearing on importing and exporting energy, and the House’s Energy and Commerce Committee’s Energy and Power Subcommittee will examine Representative Cory Gardner’s (R–CO) proposal to expedite LNG exports to U.S. allies.
In prepared remarks, David Montgomery of NERA Consulting, whose firm conducted an economic analysis of LNG exports for the Department of Energy (DOE) in 2012, reiterated his firm’s findings in an updated study. Specifically, he writes in his testimony, “We again find that LNG exports provide net economic benefits in all scenarios, and the more we export the greater the benefits. Compared to the 2012 report, prices are lower, LNG exports are larger and economic benefits are greater.”
The DOE is listening, too, albeit with a sense of caution. The DOE conditionally approved the seventh non-free-trade-agreement gas export application. Given Montgomery’s testimony regarding the increasing economic benefits the U.S. would receive and the diminishing of Russian influence, it’s pretty clear freeing our energy markets is in the public’s interest. The reality is that the DOE’s role in permit authorization is unnecessary. Congress should remove the DOE from the export permitting process altogether.