Louisiana Gov. Bobby Jindal recently spoke at the American Enterprise Institute to introduce his vision for defense policy. He pointed out that America has a tool at its disposal that isn’t the traditional weapon or diplomatic position: America’s vast energy supply.
Jindal said energy exports can strengthen ties with allies who need energy and can counterbalance their energy dependence on less friendly nations. For example, Russia’s monopolistic control of natural gas supplies in parts of Europe allows it to threaten those nations politically, such as when Russia recently annexed part of Ukraine.
“The more government removes the barriers to a thriving energy sector, the more we will be able to balance against our adversaries without ever firing a shot,” Jindal said.
He is right. The government-imposed obstacles to energy exports are hurting U.S. trade and diplomacy and make very little sense when considering the broad economic benefits of free trade.
The Costs of Red Tape
The federal government restricts energy free trade in a number of ways. For instance, crude oil cannot be exported abroad because of a 40-year-old ban. Furthermore, the Department of Energy and the Federal Energy Regulatory Commission must approve all natural gas exports to countries without an existing free trade agreement with the U.S. This allows the DOE to subjectively block exports that it deems not in the public interest. The DOE should not have this power, and natural gas should be traded freely.
Coal exports are threatened by a movement to require the Army Corps of Engineers to review the greenhouse gas emissions of every stage of coal production. This would hinder coal production and allow environmentalists to further reduce the use of coal. Such regulations discourage production and unnecessarily restrain the American economy.
Furthermore, having fewer suppliers in the international market gives bad actors more room to manipulate energy markets. We’re already witnessing the benefits of more energy supplies in the markets. Increased energy production has further diminished OPEC’s power to control oil prices. A less restrictive energy market would enable the U.S. to limit the ability of any nation or group to use energy for geopolitical purposes.
Congress Should Act
Furthermore, failure to liberalize U.S. access to international markets could result in lost economic opportunities. If the U.S. delays permits for liquefied natural gas terminals, countries will import LNG from other suppliers. American companies should not lose opportunities because of an onerously slow government process. The federal government needs to dismantle the many unnecessary hurdles to free energy trade. Natural gas, oil, and coal in particular have been unduly targeted.
Contrary to popular belief, the U.S. is not facing an energy shortage because there is enough natural gas, oil, and coal to supply its needs for hundreds of years.
Congress should:
- Terminate the DOE’s authority to approve LNG export terminals and devolve the environmental review and permitting process to the states.
- Lift the ban on crude oil exports.
- Stop overregulating coal export projects by preventing the government from using cumulative environmental impact statements.
Economic and Energy Diplomacy
Companies should operate in a free market in which they have greater access to America’s domestic resources and international markets. Creating such an energy market would improve both America’s economy and its diplomatic standing. The free trade of America’s natural resources promotes and preserves freedom not just in the U.S. but throughout the world.
