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AEA’s Unprincipled Stand

Last Thursday the House of Representatives passed H.R. 6, the Domestic Prosperity and Global Freedom Act with a bipartisan vote of 266-150. The bill orders the Department of Energy to make a final decision on applications to export natural gas within 30 days of the bills enactment. This would greatly speed up the process, as the DOE has allowed some applications to languish for more than 2 years without a determination being made, effectively strangling exports of natural gas.

The bill’s passage came despite the best efforts of America’s Energy Advantage, a business advocacy group that strongly opposes the bill. In a press release the day before the bill’s passage, AEA declared “exports of this scale will raise domestic natural gas and electricity prices for every American, undermine our manufacturing competiveness and cost the nation good-paying jobs”. Its argument is as follows: if we export natural gas, that will lower the supply sold in America, which will lead to an increase in natural gas prices. That, in turn, will “hurt manufacturing competiveness”(especially among companies who are part of the AEA) by making it more expensive to produce their goods. To protect America, then, we must limit natural gas exports.

For that reason, the AEA called the bill “harmful to the public interest of American consumers, manufacturers and the economy” in a statement following passage.

Let’s follow AEA’s reasoning a bit further. What of other goods? Could we not replace the phrase “domestic natural gas and electricity” with “aluminum” or “chemicals”, like the kind produced by some AEA members, and have the statement ring just as true? After all, plenty of important manufacturers rely on these products. Don’t the exports of these American-produced goods to other countries “hurt manufacturing competiveness” in exactly the same manner?

            And that’s just the tip of the iceberg. Thousands of major American companies are exporting their goods to other nations every day. By AEA’s logic, don’t these exports force higher prices on America’s hardworking citizens and cost us jobs?

It’s time to give AEA a sincerity test. How about if every one of AEA’s members signs a pledge that they will no longer export anything?  That would show how committed they are to the principle underlying AEA’s opposition to H.R. 6, and give these companies a chance to put their product lines where their mouths are.

            But don’t hold your breath waiting for AEA to take this test, or you might end up waiting even longer than those applications to the DOE.

(For a more musical analysis of America’s policy on gas exports, click here.)