Maximizing the Potential of U.S. Gas Exports
America’s newfound abundance of natural gas is powering a remarkable renaissance in American manufacturing and helping drive down utility costs for consumers. Glass, steel, aluminum and chemical manufacturers, among others, have announced more than 120 new projects totaling nearly 110 billion dollars of new investment. Heavy manufacturers are building new plants and factories because of the abundant supplies and stable prices for natural gas. We are already seeing dividends in the form of increased manufacturing employment. More than 68,000 high-wage, high-skilled manufacturing jobs are being created annually.
How much of this critical natural resource to export is an important national debate and one that should be guided based on a careful review of the facts. By law, applications to export American public resources like natural gas to foreign countries which have not negotiated Free Trade Agreements (FTAs) with the U.S. must be reviewed individually to determine if they are in the national interest – a determination that takes into account all aspects of society and the economy. This procedure is similar to reviews at other federal agencies that administer export license requirements, such as the U.S. Commerce and State Departments.
We believe that the benefits of this newfound natural gas abundance to our economy – robust job creation, affordable consumer prices and lower utility bills – are in the public interest of all Americans, and selling a national resource like natural gas should be considered in this light. When it comes to the complex decision of how much of American gas should be sold to our global competitors, especially those who have not yet negotiated trade agreements or “FTAs” with the U.S., the Department of Energy (DOE) has taken a sound approach.
There is one point on which there is no debate: the American manufacturing renaissance is real. Our economy has added 530,000 manufacturing jobs since 2010 and economists at the Boston Consulting Group project that if gas prices remain close to current levels, the effects of increased exports and reshoring – companies bringing overseas manufacturing back to the U.S. – could lead to five million additional jobs by 2020. Add to that the big benefits to consumers in the form of lower utility bills, and it underscores how significant the debate about natural gas exports is to our economic future. We cannot afford to get this wrong.
Moreover, if DOE were to “fast-track” all the remaining applications, as some have argued, it would threaten the U.S. manufacturing boom that has just begun while potentially doubling or tripling consumer prices for natural gas. This is not a prescription for long-term economic growth and stability.
While DOE is right to consider export applications on a sequential basis, it is equally important for DOE to consider the most recent, comprehensive, and realistic assumptions about future supply and demand for natural gas. After DOE approved the latest LNG export application (the third in a row), the Industrial Energy Consumers of America warned that the global supply and demand forecast for natural gas has already changed, noting that domestic demand is likely to be 35 to 45 percent higher by 2020 than DOE’s projections. This dramatic change in the landscape demands that the best information be considered. If we wind up exporting so much LNG that demand outstrips supply, prices will go up, jobs will once again be outsourced and our foreign competitors will be advantaged at the expense of the American people.
This scenario is well-documented in a recent study by Charles River Associates, which found that value-added manufacturing from affordable natural gas creates twice the direct value to our economy and eight times as many jobs as gas exports alone. The study also demonstrates how easily this opportunity could be lost. Unchecked natural gas exports would greatly increase prices from today’s levels. Should that happen, much, if not all, of the $110 billion of new manufacturing investment mentioned above will be at risk, and the millions of jobs those investments are expected to add in this country will go elsewhere.
The shale gas boom is a primary driver of our economic recovery and it presents a once-in-a-generation opportunity for the United States to rebuild and modernize its manufacturing base, increase our economic competitiveness and create millions of high-skilled middle-class jobs. We must make sure we get this policy right, and strike the right balance, so that we do not squander this incredible gift.
After decades of dependence which left the U.S. at the mercy of foreign countries and international cartels, the American people -- not our foreign competitors and overseas investors – should have the first claim on this public resource.