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Get the Federal Government Out of the Natural Gas Business

February 12, 2013 04:58

Federal meddling threatens to derail this valuable resource development—for no good reason.

By Amy Payne at Heritage Foundation

In North Dakota, people have jobs. That state led the nation in job creation last year, and its unemployment rate is only 3.2 percent (compared to the national rate of 7.9 percent). Why?

One word: energy.

As Nicolas Loris, Heritage’s Herbert and Joyce Morgan Fellow, writes in a forthcoming paper:

Technological advancements in directional drilling and hydraulic fracturing have led to an abundance of natural gas production in the United States that is fundamentally changing the energy landscape. The result has been more jobs, economic growth, and consistently low domestic natural gas prices in what has known to be a historically volatile market.

Despite media misinformation and Hollywood portrayals like Promised Land, the fact remains that hydraulic fracturing, also called fracking, is being done responsibly and is revitalizing local economies like Williston, North Dakota.

>>> Watch our video about the people who are flocking to North Dakota for work

Loris notes that the United States has more than a century’s worth of natural gas beneath its soil at current consumption rates. With more than 12 million Americans out of work, you would think that an economic boom like this would be welcomed—but once again, the federal government is standing in the way.

To export natural gas, companies have to gain approval from two federal agencies and their state. Thus far, the Department of Energy (DOE) has granted only one permit out of 17 applications to countries with which the U.S. does not have a free trade agreement. Loris says this should stop:

The DOE’s role in permit authorization is completely unnecessary and U.S. producers should be allowed to export [liquefied natural gas] to any country they see fit…Natural gas should be treated as any other good traded around the world…It should not be up to the Department of Energy or any federal agency to determine what amount of natural gas to export is in the public’s interest.

Tomorrow, the Senate will begin to consider the future of natural gas as the Energy and Natural Resources Committee holds a hearing on environmental factors, imports and exports, and the economy.

Unleashing natural gas production in the U.S. is important for domestic energy—it provides about 30 percent of America’s electricity and is used for heating and cooling homes, stoves, furnaces, and water heaters. More cars, buses, and trucks are running on natural gas as well. But it is also a plentiful resource that we can export. As Loris explains:

Providing other countries with cheaper energy would not only lower the prices of products that the U.S. imports (because businesses could make the products more cheaply), it would also promote economic development in those countries so that they import more American goods. The marginal price increases of natural gas in the U.S. as a result of exports would incentivize even more domestic production.

The Department of Energy released a study that concluded that the gains from exporting natural gas are overwhelmingly positive for the U.S. economy. The study also found that exporting natural gas would increase American export revenue from $10 billion to $30 billion annually. Our economy could certainly use that boost.

But federal meddling threatens to derail this valuable resource development—for no good reason. The states have been incredibly successful in promoting fracking safely and protecting the environment. Loris highlights their records:

In Pennsylvania, fracking has been taking place since the 1960s, with nearly 100,000 oil and gas wells fracked and no instances of contamination of groundwater. The same clean record is true for Ohio, where over 70,000 oil and gas wells have been fracked since the 1960s. The Interstate Oil and Gas Compact Commission has compiled statistics for all 50 states, each of which has a flawless record when it comes to fracking and groundwater protection.

With such successes, the federal government does not need to pile on the red tape. States are effectively tapping their resources and taking care of their people and their lands. Lifting restrictions on natural gas exports would provide even more of an economic boon from America’s energy revolution. With its unnecessary permitting holdups, the Department of Energy is simply preventing more towns from booming and the country from benefiting.

To learn more about fracking, check out the film FrackNation.

Amy Payne is Assistant Director of Strategic Communications at The Heritage Foundation. In that capacity, Amy serves as Managing Editor of The Foundry, Heritage’s public policy news blog, as well as the “Morning Bell,” one of Washington’s most widely read and influential e-newsletters.