Democrats Are Holding Energy—and Prosperity—Captive

If American gas companies can get a better return selling abroad, who is the government to stop them?


For decades, Americans have been told of the evils of importing energy. It sends our money abroad, the argument goes, makes us vulnerable to supply disruptions, strengthens our enemies and weakens the economy.

Now, though, the tide is turning. Domestic natural gas production is booming. Not only will we no longer have to import the stuff, we'll actually have enough to start exporting. But to hear some people tell it, the only thing worse than importing energy is exporting energy.

Among those who have their doubts about this prospect is President Barack Obama. Current law requires the federal government to approve all sales of U.S. gas abroad, and that's not a sure thing. "I've got to make a decision—an executive decision broadly about whether or not we export liquefied natural gas at all," he said recently.

Some congressional Democrats are discouraging him. Sen. Ron Wyden of Oregon warns that "major gas consumers could find themselves hit hard with energy price hikes and forced to sideline job-creating efforts" if producers can sell to just anyone. Shipping our homegrown supplies abroad "makes no sense," says Sen. Debbie Stabenow of Michigan.

Really? Usually when politicians talk about international trade, it's to decry imports and cheer exports. But these senators act as though letting natural gas leave U.S. soil will sap our vital essence.

Some corporations also oppose what they call "unfettered exports." Among them are Dow Chemical, Alcoa, Nucor and Eastman Chemical. They argue that selling American natural gas to Americans is good but selling it to foreigners is bad. They fret that foreign buyers will bid up the price of something they buy in great quantity.

The correct response to that fear is: So what? It's not the job of the federal government to intervene to depress prices of a commodity just because someone prefers cheap supplies. We don't forbid exports of wheat to control bread prices. We don't ban exports of electronics to keep Best Buy in business.

Every dollar that export controls save one corporation is a dollar that gas producers won't get. There is no compelling reason for the Energy Department to favor one over the other. If buyers in Europe are willing to pay more for gas, American petroleum companies should be free to sell to them.

Dow complains that exports could "disrupt natural gas supply and pricing." It has not, however, objected to the "disruptions" that in the past five years have increased supply while slashing prices by two-thirds.

Besides, it's not clear that allowing sales abroad would have much impact on American purchasers. The Energy Department says that if exports climb, prices could increase by a quarter over the next five years. But that would leave them considerably below the levels that prevailed before 2008.

Our usual approach in matters like these is to let prices be determined by the free interplay of supply and demand. If American gas companies can get a better return selling abroad, who is the government to stop them? If a foreigner offered you the highest price for your house, would you want someone in Washington to veto the deal?

Some environmental groups oppose gas exports out of fear that more gas means more ecological damage. But utilities that rely on gas emit far less carbon dioxide than those that use coal. The U.S. shift to gas has already cut our greenhouse emissions to the lowest level since 1994.

As for any damage from hydraulic fracturing used to extract gas, exports are irrelevant. It occurs regardless of where the gas is sold. The right way to address it is by penalizing companies that contaminate groundwater or cause other destruction.

Behind the opposition to gas exports is the suspicion that shipping a vital commodity to foreigners instead of keeping it for ourselves must be a mistake. But international trade is built on people in each country producing and selling what people elsewhere want.

It's hard to argue that Middle Eastern oil states are exploiting us when they sell us fuel—and that Europeans will also be exploiting us when they buy it. In reality, no one is getting hosed in either instance. The exchanges occur because they benefit both parties.

That's especially obvious in the case of natural gas exports. But some politicians have a gift for missing the value of trade. They call to mind H.L. Mencken's definition of a cynic: "A man who, when he smells flowers, looks around for a coffin."