Thursday, March 13, 2014


 Believing in the axiom,"...a crisis is a terrible thing to waste", powerful forces in Washington are trying to use the situation in the Ukraine to argue for lifting restrictions on the exporting of American natural gas and oil.  Since the Arab oil boycott and shock in the early seventies, with the arrival of long gas lines and fears of compromised national security, it is illegal to export natural gas or oil in order.  Now, with the advent of horizontal drilling and fracking, America enjoys a surplus of both items and the cheap prices that follow when supply exceeds demand.  Not for long if the Speaker of the House and others have their way.

     In a Wall Street Journal column, Speaker John Boehner calls on President Obama to speed up the permit process that would allow for the construction of facilities to process, freeze and export liquefied natural gas and allow for the export of domestic oil.  Boehner claims these resources can be used as a way to undercut Russia by offering natural gas to Russian customers in Europe in the event Russia cuts them off because of their support for sanctions connected to the invasion of the Ukraine.  Boehner is not alone.  Democrats from energy producing states like North Dakota and Louisiana are lending their voices to the cause.  The longer the crisis in Ukraine, the louder the demands will get.

     Boehner sight numerous studies claiming America will produce more natural gas and oil than it needs.  (increasing pressure for the Keystone pipeline too)  America, they say, needs to punish Russian president Putin by stepping up and giving Europe all the natural gas it needs.  They see this as Putin's Achilles heal.  They say this, and call for new export authority, despite the fact even if new permits were issued today; it would be seven to ten years before any significant exports could be produced.  So why are they pushing so hard now?

     Supporters of exporting American energy need to use the current crisis to scare Americans into supporting a policy that is against their own economic best interests.  It is a classic example of "misdirection".  While you are intent on the crisis in the Ukraine, maybe even getting angry, maybe want to strike back at Putin and Russia, you will translate all that emotion into concrete action by supporting a lifting of export restrictions.  The oil and gas corporations are chuckling knowing if you were left to your own devices you would never cut your own throat, but the crisis in the Ukraine is exactly the distraction they need to overcome your common sense.

     All this natural gas being discovered is a huge boon for this country.  Companies are moving manufacturing plants back to America from overseas because it's cheaper due to lower energy costs.  Jobs are being created.  Utilities are shutting down old coal-fired plants and switching to natural gas because it's cheaper.  This will have a dramatic effect on the reduction in greenhouse gases.  Abundant natural gas could lead to more vehicles on the road powered by it and even more jobs created.  It can reduce energy costs for the average home putting more money in consumers pockets in an economy where 2/3 of it is dependent on consumer spending.  All of these benefits, and more not even envisioned yet, disappear if you allow the "surplus" to be given to foreign markets.  The only beneficiaries then will be the energy corporations.

     The law of supply and demand is simple.  More demand drives up the cost and uses up any surplus.  If you want to see this in real time, look at the effect this harsh winter in the Midwest and East has had on the price of natural gas.  It has skyrocketed in a few months.  This despite the alleged surplus.

     Now imagine Boehner gets his way.  Imagine we build huge LNG export operations at ports along the Gulf Coast from Louisiana to Texas.  The gas is exported to Europe and the rest of the world raising demand until it exceeds the supply.  The price goes up here at home of course.  Manufacturers lose the price edge the get from lower energy costs.  Utilities have no incentive to close old and damaging coal-fired plants.  Home heating bills will be huge and all of this susceptible to market forces which Americans would have no control over.

   I don't need to tell you what the energy companies will do.  They will justify price increases due to the heavy demand.  (not from Americans)  They will say there is nothing they can do about it because the market dictates price.  They will do exactly what they do with gasoline where price continues up and rarely goes down.  Supporters of exporting energy say there is so much Americans won't be hurt and besides, we have to do this to hit back at that thug Putin.  (Houdini would be proud)

  What is most distressing is to see Boehner and Sen. Landrieu from Louisiana, and others, putting short term political and financial gain ahead of patriotism.  Landrieu is running for re-election and Boehner sees a yellow brick road for Republican coffers from the huge profits energy companies will achieve at your expense and they are willing to put narrow self interest ahead of what is in the nation's best interest.

     It is in America's best interest to have a cheap abundant energy supply.  It is in America's interest to have manufacturing return and give them an edge over foreign competition.  It is in America's interest to utilize natural gas and oil for domestic consumption saving American families billions of dollars.  It is in America's interest to be able to end a detrimental dependency on foreign energy sources that drive political decisions about war and peace.

     If you allow the exporting of energy, it plays right into the hands of those who will always choose a quick buck over what is the best long-term policy for all of us.  Boehner, and company, want you outraged at Putin, teary-eyed for the Ukrainian people, demanding something be done to punish Russia, so you won't notice how you are being sold a bill of goods which will harm you, your children, the environment and America's one chance for energy security.

     Please keep your eye on the prize and don't get fooled into this energy version of 3-card Monty.

1 comment:

  1. It's ALWAYS about the money with them....and this is why I am not a Republican. I used to debate these things with "conservative" co-workers at the local Sheriff's Department (I no longer work there) and could pretty easily end a conversation with "The R's care about cash, the D's care about people". Sad, but true. Half way through the probate, Bernie - will write soon.