America’s energy revolution is underway. Proven oil reserves have been steadily rising for years, and increased production of shale gas is projected to create tens of thousands of new manufacturing jobs in the years ahead. But that doesn’t mean we know precisely where it’s all going, or when it will end.
One of the bigger questions, for example, is: what should we do with all this gas? The answer is not as simple as it sounds. Debate in Washington is already heating up on the issue of exporting liquified natural gas (LNG). The Wall Street Journal reports that a number of congressmen from energy-producing states are currently lobbying the Obama Administration for authorization to export LNG to countries with whom America lacks specific trade agreements. Others, however, oppose such agreements, preferring to keep cheap energy supplies at home to give American companies a leg up over foreign competitors:
In a letter to Energy Secretary Steven Chu on Tuesday, the lawmakers said a review of various export proposals didn’t appear to have “a sense of urgency” despite the lawmakers’ belief that exports will spur more natural-gas production and create jobs.
The Energy Department is reviewing about 10 proposals to export liquefied natural gas to countries lacking a free-trade agreement with the U.S. The department says it won’t approve those projects until it analyzes the effect of exports on domestic prices, employment and economic growth, among other factors.
Our politics clearly haven’t kept pace with the changing domestic energy situation of the past five years. The debate over exports is extremely common in energy-exporting states but relatively new to the U.S. We can expect such debates to get much louder and more frequent as the energy revolution picks up steam.
In general, Via Meadia thinks we should let markets rip when it comes to exporting gas. Creating a large base of steady customers will help ensure that we make the investments needed to develop our gas resources, and in any case the US will still enjoy significant cost advantages with domestic gas supplies.
But however the policy makers work this one out, we’d rather see arguments about how to handle our wealth than arguments about how to ration and allocate scarce and expensive resources. These are luxury problems, and we hope we get plenty more like them.