President Obama: Unleash Our Energy!

In the President’s State of the Union address, his praise for the energy revolution, encouragement of exports and an open trade policy, and his determination to cut red tape were music to the ears. Unfortunately, these positive notes were not put together into a symphony of sound energy export policy.

The President highlighted the tremendous economic contributions of America’s energy revolution in oil and natural gas:

    “Today, no area holds more promise than our investments in American energy. After years of talking about it, we’re finally poised to control our own energy future. We produce more oil at home than we have in 15 years.
    “We produce more natural gas than ever before — and nearly everyone’s energy bill is lower because of it.
    “[T]he natural gas boom has led to cleaner power and greater energy independence. We need to encourage that.”

The President also emphasized the importance of free trade, and exports:

    “To boost American exports, support American jobs and level the playing field in the growing markets of Asia, we intend to complete negotiations on a Trans-Pacific Partnership. And tonight, I’m announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union — because trade that is fair and free across the Atlantic supports millions of good-paying American jobs.”

And the President expressed a willingness to cut red tape and speed up permitting. On some initiatives, he said if Congress would not act, he’d find ways to move the bureaucracy along using executive orders.

Add these three points from his speech together, and one can see that expediting the export of American natural gas is wholly consistent with the President’s priorities, and it’s achievable.

Now if only he would tell that to the Department of Energy.

Twenty-three applications for licenses to export liquefied natural gas are stalled at the Department of Energy. These licenses are necessary to export LNG to countries without free trade agreements with the U.S., including our most likely customers, such as Europe and Asia. One application has been under review at the DOE for over 720 days.

Energy exports are vital to encouraging continued production of oil and gas at home. In places like Alaska, thanks to the foresight of the state’s governor and legislature, one of the world’s largest natural gas reserves is closer to development than it’s been in 40 years. This untapped resource will finally be brought to market through a $45 billion pipeline and infrastructure project – a collaboration announced recently by the governor — that will create thousands of new jobs in the state.

Exports of LNG will help keep prices of natural gas at a sustainable level that will allow private investment to continue to develop this resource as they are contemplating in Alaska. Exports of LNG also can make a real dent in our trade deficit, and enhance our geopolitical standing and influence.

If President Obama is serious about cutting red tape, growing exports, and continuing this energy revolution, fixing the LNG export license approval process would be the place to start.

In addition to emphasizing natural gas in his State of the Union speech, President Obama also touted our boom in oil production. But he kept mum on the current ban in place on crude oil exports. The ban is a very broad one, allowing only small amounts of oil to be shipped to Canada.

Senator Lisa Murkowski of Alaska argues the President has the power effectively to lift the ban via executive order. The Senator’s recently released white paper on U.S. energy exports recommends that “The President may also simply make a national interest determination that the present regulatory structure, which generally prohibits crude oil exports, is unnecessary and counterproductive.”

Momentum is building to lift the ban on oil exports. Following the State of the Union, a Senate Committee on Energy and Natural Resources hearing on crude oil exports reinforced the economic case for removing the current ban.

President Obama has acknowledged the economic benefit that natural gas and oil have brought to the U.S. He has also made clear his intent to use executive power to get things done. It is my hope that the president will put two and two together and use his administrative power to create new opportunities for the American people using the natural resources and technology we have here at home.

In his speech, President Obama said he would act on his own to “slash bureaucracy and streamline the permitting process.” By expediting the LNG export approval process and lifting the ban on crude oil exports, he could create many additional new jobs and enhance economic recovery and growth.

To boost American exports, support American jobs and level the playing field in the growing markets of Asia, we intend to complete negotiations on a Trans-Pacific Partnership. And tonight, I’m announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union — because trade that is fair and free across the Atlantic supports millions of good-paying American jobs.

Dr. Margo Thorning serves as chief economist and senior vice president of the American Council for Capital Formation.