by Robert Maynard
TNR has posted several articles about how the revolution in new energy technologies is driving economic growth. The problem is that this revolution is having nowhere near the effect that it could have. The full economic impact of this revolution is being held back by meddlesome government policies. Here is a look from this National Review article at how much damage the government is doing to our potential energy export boom:
On May 17, the Department of Energy (DOE) approved just the second license in America to export natural gas. Nineteen more applicants still wait. Yes, private businesses, willing to spend tens of billions of private capital, are lined up for a schoolyard game of “Mother May I” to get permission to export a product that the U.S. is uniquely good at manufacturing. So good, in fact, that America is now the world’s No. 1 producer, with no end in sight. What a world.
Liquefied-natural-gas exporters are eager to capitalize on the U.S.’s ridiculously abundant supply. Consider: Since 2010, U.S. natural-gas production from the three major shale fields has risen 250 percent. In order to sell some of that abundance to eager overseas buyers, exporters must spend billions of dollars on enormous facilities to supercool and liquefy the gas so it can be carried on ships. The DOE’s decision to grant the second permit ever for that activity was met with cautious praise, especially by those hoping for more permits to dribble out.
Congressional hearings and government and private studies have parsed the economic benefits of exporting natural gas, as have innumerable articles and blogs. But this whole controversy is based on outdated laws and assumptions.
The DOE’s control over natural-gas exports — and the Department of Commerce’s over crude oil — comes not from some fundamental constitutional principle, but from legislation that dates back to 1938 and 1975. The underlying motivation then was a misconception about the imminent exhaustion of domestic oil and natural-gas resources (this outdated idea is still cherished by some — call them “clingers”).
One thought experiment cuts to the core of this issue. Substitute words like wheat, soy, microprocessors, or even software, for the words natural gas and ask whether it makes sense for bureaucrats and politicians to be empowered with decisions about where American firms can sell what they produce cheaper, better, and more productively than any other country.
Modern technology has made the U.S. the world’s fastest-growing producer of oil and natural gas. This is not, it bears noting, the result of some happy “discovery” in a heretofore unexplored corner of America. The U.S. Geological Survey identified the existence of pretty much all the hydrocarbons in America’s territories a century ago. Instead, today’s smart-drilling technology, of which hydraulic fracturing is just one feature, albeit an important one, has changed the game. Consider how the ever-cautious International Energy Agency recently put the implications: “[The] surge in North American oil production will be as transformative to the market over the next five years as was the rise of Chinese demand over the last 15” (emphasis added.