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ENERGY TECH
AEA's tactic: If you can't win, delay
by Margo Thorning
Washington (UPI) Sep 30, 2013


While the Senate Energy and Natural Resources Committee considered and ultimately rejected Ron Binz's nomination for Federal Energy Regulatory Commission Chairman, committee members may have missed the latest chapter of gamesmanship being played by companies trying to stop the export of U.S. liquefied natural gas.

In an attempt to cause further delay to the LNG export-license approval process, America's Energy Advantage last week filed a motion to intervene in the U.S. Energy Department's review of the Freeport LNG Expansion export license application.

Never mind that the license approval proceeding began in December 2011 and the deadline for filing comments was in April 2012. AEA, a coalition that includes The Dow Chemical Company, isn't just belatedly asking the Energy Department to intervene as a party to the case but is actually asking the agency to rewrite the rules under which it grants LNG export licenses.

The AEA's motion is nothing more than a thinly veiled dilatory tactic, imposed upon an export license application that has been languishing for almost two years.

Underpinning AEA's motion is the mistaken notion that the sky will fall if the Energy Department approves all the export licenses currently pending. The truth is that many, if not most, of the pending licenses would still have numerous regulatory and financing hurdles to overcome even after receiving Department of Energy approval -- and many won't break ground as a result.

Even under the highest export scenario -- up to 16 billion cubic feet per day, forecasted in the government's own study -- the effect on U.S. natural gas prices will be minimal. That's because the United States has an abundance of natural gas. Last year the Potential Gas Committee said that the United States possesses a total technically recoverable resource base of 2,384 trillion cubic feet.

Every major macroeconomic study has found that the more LNG the United States exports, the better off the country will be. The approach advocated by AEA, seeking to maximize a few companies' own profits at the expense of the broader economy, threatens the estimated $73 billion-plus in net gross domestic product growth per year and the 452,000 newly created jobs potentially made possible by LNG exports.

Beyond jobs and GDP, exporting U.S. LNG also has compelling international trade and geopolitical benefits. LNG opens a whole new export sector, which can contribute to the U.S. balance of payments and lower the trade deficit significantly. And the nature of the United States as a stable source of energy for other countries can provide us with added "soft power" around the world.

But the clock is ticking. The United States must move expeditiously to get a leg up on global LNG competition. At least 63 international terminals are in various stages of development, seeking to grab Asian and European demand. The AEA is hoping that by playing a stalling game, it can hold up export licenses long enough that global customers bypass the United States.

Bureaucratic picking of winners and losers, as well as private-sector rent-seeking behavior, are never a recipe for success. The Department of Energy should accelerate the pace of export license approvals; then let free market dynamics take over.

(Margo Thorning is senior vice president and chief economist with the American Council for Capital Formation and director of research for its public policy think tank. She is also director of the Act On LNG Campaign (www.actonlng.org).)

(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

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