Sunday, May 19, 2013

Exporting Natural Gas ... When Allowed To, The Free Market Works

Government spending represents a tax on the people.

Additional private sector revenues generated by private sector investment provide jobs and income for the people and tax revenues for the government.

While perfectly obvious, the foregoing is often ignored. But not always.

Finally, there's a bit of free market light at the end of the Obama energy tunnel. While one move doesn't save the day, of course, it does indicate that perhaps we still aren't entirely a socialistic society, and one led by politicians who look to government and not the the global market as the cure to our nation's many financial ills.

U.S. Approves Expanded Gas Exports says this:

"The Obama administration on Friday cleared the way for broader natural-gas exports by approving a $10 billion facility in Texas, a milestone in the U.S. transition into a major supplier of energy for world markets.

The decision reflects a turnaround in the U.S. energy trade. Five years ago, many companies built natural-gas import terminals, anticipating greater U.S. demand for imported fuel. Now, a group of private investors that includes ConocoPhillips plans to turn one of those terminals—in Quintana Island, Texas—into an export facility to ship natural gas to Japan and other nations.
Cheniere Energy Inc.'s Sabine Pass facility in Louisiana won approval in May 2011 to export LNG to the countries without free-trade agreements. It expects to begin exporting in 2015.

In giving the project, known as Freeport LNG, the green light, the Department of Energy signaled that it found the prospective benefits from exporting energy outweighed concerns about possible downsides for the U.S. economy.

Proponents of greater exports, including the oil and gas industry, say that exporting inexpensive natural gas will help the U.S. trade balance, help advance the adoption of clean-burning fuels around the world and shore up energy-poor U.S. allies.

Opponents counter that exports may cause domestic prices to rise, hurting consumers and some industries such as chemicals that have benefited from cheap natural gas. Some environmentalists oppose exports for a different reason, saying the U.S. shouldn't encourage more fossil-fuel production.

"I hope this means that more facilities will get approval in due time, sooner rather than later," said Freeport LNG Chief Executive Michael Smith in an interview. "The country needs these exports for jobs, for balance of trade and for geopolitical reasons—our allies are asking for them.". . .

The combination of hydraulic fracturing and horizontal drilling has unleashed a natural-gas bonanza that has made the U.S. the world's largest natural-gas producer.

President Barack Obama has welcomed the boom, and his administration showed in Friday's decision it was ready to buck environmental groups in order to spur further production. Deb Nardone of the Sierra Club called the move a "bad deal all around" and a "giveaway to the dirty-fuel industry."

The Department of Energy said it had given conditional authorization to the Freeport project to export up to 1.4 billion cubic feet a day of liquefied natural gas. The approval is needed for exports to countries with which the U.S. doesn't have a free-trade agreement, a category including major trading partners in Europe and Asia. The project, which is expected to begin exports in 2017, still needs approval from the Federal Energy Regulatory Commission.

The Freeport terminal is the second export facility approved by the Obama administration. Cheniere Energy Inc.'s Sabine Pass facility in Louisiana won approval in May 2011 to export LNG to the countries without free-trade agreements. It expects to begin exporting in 2015.

The first approval got relatively little notice, but the issue gained prominence as export applications piled up and leading companies on both sides of the issue began to clash over the merits of exports. The Department of Energy spent much of 2012 waiting for a report it commissioned on the issue, which was released in December 2012 and concluded that exports would benefit the U.S. economy overall.

Friday's decision is an important harbinger for the remaining 19 applications to export gas to non-FTA countries. That's because, by law, gas exports are presumed to be in the public interest unless shown otherwise. . . .

The Department of Energy said it conducted an "extensive, careful review" that considered "the economic, energy security, and environmental impacts," and found that the project was "not inconsistent with the public interest."

The department said that in considering future export applications, it will consider market conditions, including projections about natural-gas prices, supply and demand. All remaining permit applications will be considered on a case-by-case basis, the department said, keeping in mind the cumulative amount of authorized gas exports."

Summing Up

It's tempting to call this non-action by the government good news.  On reflection, however, why should it be considered good news when the government merely allows private sector investment which will add to the strength of our economy and the world's as well?

In other words, maybe it's really bad news when we take it as good news when the government doesn't do something to inhibit private sector investment and economic growth. Aren't We the People supposed to be the ones in charge?

In any event, I know this to be true. Government is too big and far too intrusive in our personal lives and the economic affairs of our nation. From K-12 public education to college loans to underwriting 90% of home mortgages, to Social Security, Medicare and Medicaid, and now ObamaCare, we have become more like socialistic Europe than I would have ever thought possible.

And although Europe is presented to us as a role model by many of our government officials, the European road is in fact a road to nowhere.

But with this approval, the energy resources of America will now be better used, albeit only marginally so, to the benefit of the world at large and Americans at home, so I guess that alone makes it good news.

Maybe it's even the beginning of a much needed change in government policies and their discouragement and restraint of more and much needed job creating, fiscally responsible, economy enhancing, private sector initiatives. Let's hope so.

That's my take.

Thanks. Bob.

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