A Bipartisan Effort to Unblock Natural Gas Exports
The great statesman Henry Clay observed that politics is not about ideological purity, it’s about governing. If you can’t compromise, you can’t govern. That is how the system used to work until the legislative process became dominated by extremes. Clay’s counsel implied reasonableness, realism, and relevance, and there is little of these evident today.
The Senate Energy Committee produced a bipartisan bill – S.2012, co-sponsored by Senators Lisa Murkowski (R-AK) and Maria Cantwell (D-WA) that started a genuine bipartisan effort. If it passes, and there is no guarantee that it will, it would be the eighth energy bill since 1974.
The history of energy legislation is not encouraging. The first legislation was intended to counter the 1973 oil embargo by pursuing energy independence, then to promoting alternatives to fossil fuel, while the most recent bill was intended to address climate change. All have been notable in wasting money and falling short of sound energy objectives.
The Murkowski-Cantwell bill holds more promise because it would streamline the handling of requests to build liquefied natural gas (LNG) terminals and promote modernization of the electric grid. Both are important for the US economy. It is unfortunate, however, that the bill is weighed down with provisions that increase government power, interfere with the workings of market forces, and have nothing to do with energy.
The government is already the major land owner in the nation and has not excelled in managing what it already owns. Increasing its ability to control more by making the Land and Conservation Fund permanent defies logic and further erodes the notion of private property. What does that fund have to do with energy? Provisions, like the ones in this bill, that focus on energy efficiency show an abiding distrust for market incentives. But, if meaningless efficiency provisions are the price of passing a better-focused bill that enables LNG exports and improves our electric grid, the trade-off might be worth it.
As a nation, we have a great opportunity to become the major international player in the natural gas market. The energy renaissance underway provides us with natural gas reserves to last beyond the end of this century. The value of current and future investments depends on making full use of those reserves and that requires the ability to export.
The permit approval process at the Federal Energy Regulatory Commission and the Department of Energy over the last five years has moved with glacial speed. According to the former, six terminals have been approved and are under construction, and another twenty-three are in various states of review. No terminals are currently operational, although one is scheduled to begin operations shortly. This drawn-out process has all the appearances of export terminals being Keystoned because the Obama Administration’s hostility toward fossil fuels.
The United States could become one the world’s largest exporters of natural gas. The economic benefits are significant. Every billion dollars in exports is estimated to create between 6,000 jobs. Exporting natural gas would help Europe diversify its supply sources and also help Japan meet its energy challenges. The economic benefits have been documented by studies conducted by ICF and NERA, among others.
The current low prices for oil and natural gas and general economic uncertainty mean that these potential benefits will be further delayed, giving our trading competitors and unnecessary advantage. The foregone benefits cannot be recaptured but they also do not have to be perpetuated. Streamlining the permit process is a high priority.
The export and infrastructure provisions in S.2012 could be held hostage to an avalanche of Democratic amendments, including one dealing with the Flint, Michigan water crisis, which has nothing to do with energy.
The failure of Congress to act responsibly on important legislative matters helps explain the level of anger by the voting public. That anger can have serious unintended consequences unless Congress begins to govern in a manner reflecting Henry Clay’s wise counsel. A clean energy infrastructure bill would be a good start.
William O'Keefe is the President of Solutions Consulting. You can follow him on Twitter here.
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