Will Today Be the Day LNG Exports Win the War?

Published in Real Clear Energy

By Margo Thorning

Congressional attention on exports of American natural gas is reaching new heights. A range of voices in economic, trade, energy and foreign policy has been urging Washington to expedite the long-stalled approval process for export licenses of liquefied natural gas (LNG). Now, both the Senate and House have scheduled hearings Tuesday that will address the issue of expediting LNG exports.

The groundswell of support for U.S. LNG exports that we are witnessing today is no coincidence; it is the result of years of stalled license approvals, increasing reserves U.S. natural gas and pleas from America’s allies and trading partners in Europe and Asia.

The Congressional hearings should underscore the broad support for ending LNG export delays. Congressional leaders, energy and economic experts, and foreign policy advocates are raising the profile of the message they have been sending to the Obama Administration for years: The time to move on LNG export approvals is now.

The outpouring of support for LNG exports has put the issue in front of the average voter, increasing political pressure for decisive action. A significant outcome of next week’s hearing will likely be an invigorated call from constituents for LNG export-related jobs.

A NERA Economic Consulting study released recently reported that LNG exports could “accelerate the return to full employment.” The report estimates that LNG exports would supply jobs to as many as 45,000 unemployed workers between 2013 and 2018. In plain language, this study highlights the fact that the Department of Energy’s delay is not only tying our hands internationally, it is stealing jobs from the average American with every passing day. GDP, consumption and tax receipts would all increase as well.

It is important to note that this NERA study is an update to a study it performed for the Department of Energy in 2012. The most recent analysis updated all 63 LNG export scenarios from the original study, while adding additional scenarios. The conclusion is that “U.S. economic welfare consistently increases as the volume of natural gas exports increases” and that “unlimited exports always create greater benefits than limited exports in comparable scenarios.”

Compared to its 2012 study, the 2014 NERA study shows that the projected benefits to U.S. welfare resulting from exporting LNG went up. The actual projected benefits themselves increased, in addition to the upward curve of benefits in relation to years of exports. The only problem is that our Administration has not acted, leaving us unable to enjoy the economic benefits of exporting some of our bountiful supply of natural gas.

A few misinformed critics of LNG exports strive to continue isolating the United States from the international LNG market, while isolating the domestic benefits of our liquefied natural gas. In light of the most recent NERA report, however, their arguments hang on a thin reed indeed.

The groundswell of support for LNG exports has grown as the case for jobs, economic growth, trade, and support for our friends and allies has become ever clearer in the face of the Department of Energy’s delay in license approvals. That tide has become a flood. Many in Congress recognize that. If the Department of Energy refuses to take heed, perhaps Congress can focus its attention.

Margo Thorning is senior vice president and chief economist with the American Council for Capital Formation.