James Taylor - Writer, Policy Analyst, Radio Host, Public Speaker

Natural Gas Export Restrictions Are a Bad Idea

March 16, 2013 by James

Dow Chemical, Alcoa, and other politically connected companies are engaging in rank hypocrisy as they push for laws to prevent natural gas producers from exporting their product overseas, Competitive Enterprise Institute (CEI) senior fellow Marlo Lewis explains in an outstanding article on CEI’s GlobalWarming.org website.

The companies, together forming a group called America’s Energy Advantage (AEA), claim that their “rationale for restricting gas exports is that when gas is not exported but instead is used to manufacture products, it creates “eight times the value” across the entire economy,” Lewis observes.

After noting that companies relied on a laughably implausible study to support their claims, Lewis argues that even if AEA’s claims were true, the companies’ arguments still fail.

“Even if … gas turned into chemicals generates ‘eight times’ the economic value of gas sold abroad,” Lewis explained, “such third-party assessments should have no bearing on how companies dispose of their own property. As American Enterprise Institute scholar Mark Perry points out, AEA companies did not invest a dime to develop fracking and horizontal drilling technology, construct the wells, or hire the rig workers, yet they presume to decide what happens to the gas after it’s extracted from miles under the Earth. … AEA’s implicit premise is that central planners have the right, nay the duty, to commandeer private property whenever the resource would add more value in someone else’s hands.”

Just as importantly, Lewis explains, “Dow, Alcoa, Eastman, Huntsman, and Nucor primarily manufacture intermediate goods, not final goods. As natural gas is an input to them, so their products are inputs to still other companies. … So by AEA’s logic, the government should restrict exports of chemicals, aluminum, and steel to hold down domestic prices and make U.S. manufacturers of final goods more competitive. The ‘public interest’ demands it! I’ll bet my salary against [Dow Chemical CEO Andrew] Liveris’s that he will never, ever agree that sauce for the goose should also be sauce for the gander.”

Lewis’ full article is available here.