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Charles Lane: Of course the U.S. should export natural gas

I don't have a dog in the Senate fight in Massachusetts between 18-term Democratic Rep. Ed Markey and Republican Gabriel Gomez, a former Navy SEAL.

But if energy policy matters to voters up there, they should hold Markey accountable for not adapting to new realities that have emerged since he came to Congress in the 1970s.

In particular, Markey has been one of Congress' most vocal advocates for the wrong-headed idea of limiting U.S. exports of natural gas.

A decade ago, U.S. companies were preparing terminals to receive ships containing liquefied natural gas from the Middle East. Now, this country is producing so much previously unavailable shale gas that exporters are campaigning for federal permission to sell liquefied natural gas abroad.

The positive effects are legion: a better U.S. trade balance, less global market power for Russia and other unstable or authoritarian energy producers, lower carbon emissions (relative to coal) in recipient countries.

That's why President Obama is reportedly leaning toward approving some or all of the export applications pending at the Energy Department.

Markey, however, has introduced a bill that would create a 10-year export moratorium for gas produced on federal land and another bill that would eliminate the presumption in current law that exports are in the public interest.

Markey contends that shipping some of the U.S. gas bounty abroad would raise its price for people and businesses here. That's true - in the short run.

Over the medium to long term, however, producers' pursuit of export market share would induce them to bring forth more supply, moderating prices here and abroad.

Restricting gas sales to the U.S. market, by contrast, would discourage new production, eventually pushing prices back up.

This is why an analysis for the Energy Department by NERA Economic Consulting found that any modest price increases from increased gas exports would be greatly outweighed by economic benefits to the economy as a whole.

On net, there would be "an increase in US households' real income and welfare."

As for the environment, I understand greens' aversion to fossil fuels. (In Markey's case, the phobia extends to zero-carbon nuclear power, against which he has also campaigned in the House.)

We have to extract shale gas in the environmentally safest way possible.

But the safest way can't be "not at all," no matter how fervently some enviros may wish it. For the time being, we need oil, coal and gas - the latter of which is the cleanest-burning and therefore a good "bridge fuel" to the still far-away carbon-free future.

In fact, U.S. gas exports could help green up the global energy mix, just as increased domestic gas use has helped the United States cut carbon emissions by 526 million metric tons between 2005 and 2011.

This happened in part because U.S. gas displaced U.S. coal, a record 125 million tons of which were - you guessed it - exported in 2012, according to the Energy Department.

Given the opportunity, some foreign buyers might well switch to U.S. gas, especially in carbon-conscious Japan and Europe.

In short, free trade in energy - like free trade generally - facilitates price discovery, which, in turn, enables efficient allocation. The only losers are those governments or corporations that reap short-term windfalls from protectionism of one kind or another.

That's also a good argument for lifting the United States' outmoded ban on crude oil exports.

It was established in 1975, a time of rising Middle Eastern oil power and declining U.S. oil production.

Markey came to Congress in that bygone era and, alas, his thinking on oil exports hasn't evolved much.

"American oil should be kept here to benefit our consumers, not shipped to Europe or Asia to help boost oil company profits," he harrumphed in March.

It's a tad unfair to single out Markey. Many others share his simplistic views on gas exports - including the Sierra Club, key Democrats in Congress and leading chemical manufacturers.

The last group uses gas as a feedstock, so it wants federal help suppressing its price.

Still, Markey could do more mischief as a member of the majority in the Senate than he can in his current post as ranking minority member of the House Committee on Natural Resources.

President Obama would be wise to adopt a more up-to-date approach, as he seems inclined to do.

Booming U.S. energy production promises to transform this country and the world, mostly for the better. To reap the full benefits, though, we must embrace the change rather than resist it.

Lane is a member of The Washington Post's editorial board.

 


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