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Rep. Markey asks ‘Why is America rushing to export natural gas?’

January 10th, 2012

Mark Muro Brookings

Last month I said I thought it would be premature for the Department of Energy (DOE) to rush into authorizing massive exports of natural gas, notwithstanding the amazing recent boom in American shale gas production. My worry was that precipitous large-scale exports could tighten U.S. supplies and raise prices, with negative ramifications for domestic industrial concerns that depend on cheap gas.

My thought: Wouldn’t it be preferable to re-shore good-paying manufacturing jobs rather than serve as a resource colony for the rest of the world? Seems we should be prudent here!

Now, Rep. Ed Markey (D-Mass.) has weighed in with a letter to Energy Secretary Steven Chu, and, to his credit, the ranking member of the House Natural Resources Committee has expanded on these concerns, added some new ones, and done it with an admirable eye to the long-term economic and industrial interests of the country.

Markey’s primary thrust is to question natural gas exports from two primary angles: their potential influence on the cost of energy for households and industries, and their potential influence on the use of natural gas as a “bridge fuel” for reducing carbon emissions.

To the first point, Markey is concerned that permitting the export of natural gas could raise the price American families and businesses pay for it given that the global market price for natural gas is considerably higher than the domestic one. That could hurt household budgets and place a further drag on American manufacturing just as the nation’s producers and exporters have begun to compete more aggressively. As to the carbon factor, Markey worries that higher prices driven by foreign demand would reduce natural gas’ cost-competitiveness vis-à-vis coal and slow the U.S.’ transition to cleaner-burning fuels. That would reduce natural gas’ potential as a so-called “bridge fuel” in the transition away from coal and oil and toward renewable energy sources.

Yet there is one more aspect of Rep. Markey’s letter that bears consideration. Simply through its format, which presents fully 11 basic questions about natural gas exportation, Markey has usefully underscored how many open questions remain about the natural gas boom, gas supplies, its use, its regulation, and prices. Markey sticks to questions directly focused on liquid natural gas exports—“What would be the consequences of exporting this volume of natural gas?” “How important is the price of natural gas for the competitiveness of manufacturers?” “Would DOE deny export applications if we experience a spike in domestic prices?” But even with those queries (which leave aside myriad unresolved regulatory, environmental, and well-yield questions) underscore how incredibly early it is in the latest gas boom.

In my book, it’s simply way too soon to commit to the massive export of natural gas given that we’re only beginning to understand the volume of recoverable supplies, the feasibility of extraction, and the impact of newly-tapped shale gas on downstream industry input costs and consumer budgets. Furthermore, medium- and long-term regulatory uncertainties still loom over the entire industry. My bottom line for now: Let’s not give away the store until we know how much gas is safely accessible with existing technologies.

(Mark Muro is Senior Fellow and Policy Director, Metropolitan Policy Program at the Brookings Institution, a non-profit policy organization based in Washington D.C.)


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