Jul 24, 2012
Even with the invasion of campaign ads on YouTube and the copious coverage of the candidates’ stump speeches, there is one topic that we have not yet heard President Obama or Mr. Romney address sufficiently. It’s natural gas. Voters need to know where the candidates stand on whether or not the government should allow the exportation of liquefied natural gas (LNG) to Europe and Asia. This is an important question; it deserves more public debate.
Thanks to a technique called hydraulic fracturing, aka “fracking,” the US now has access to a century’s worth of natural gas right under our feet. Assuming that practice will make perfect, and that environmental concerns with fracking will dissipate, these humongous pockets of gas could be just what we need to achieve greater energy independence and to once again become a competitive manufacturer. Managed wisely, domestically produced natural gas, which can be brought to the surface at a fraction of the cost of importing LNG, could help us out of harm’s way in the world and back to work at home.
Seems like a no brainer to keep the bounty of domestic shale gas for domestic use. However, there are potential political and economic issues with limiting the exportation of LNG. For starters, it is not only China that wants our natural gas. Our closest allies are also hungry for cheaper fuel. Japan is especially needy since the Fukushima nuclear disaster caused preventive plant shutdowns nationwide. Neither our friends nor our enemies are going to like it if we are stingy with our new found glut of natural gas. Restricting exportation could lead to retaliation in other markets and a lot of international ill-will.
There is also significant domestic pressure by energy companies that want to export LNG to maximize their profits. Several companies are lobbying Washington for the permits to build export facilities and trade LNG to Europe and Asia – where prices are two to four times higher than in the US. These companies are working quietly for now; however, any politician who sticks his or her neck out to pass legislation to limit the export of natural gas will likely suffer significant and very loud public criticism.