Exporting natural gas will result in economic 'winners and losers," says a report commissioned by the U.S. Energy Department.
Well, yes. Free markets always produce winners and losers -- which is why politicians reflexively meddle.
When the report was released last week, Oregon's Sen. Ron Wyden called on the Energy Department to protect American consumers and manufacturers from any harmful effects of gas exports. Wyden is about to become chairman of the Senate Energy and Natural Resources Committee -- so his opinion matters, especially to the Coos Bay area, a proposed site of liquefied natural gas exporting.
Exporting LNG became economically plausible when new drilling techniques opened enormous North American reserves. Domestic gas prices have plummeted, and energy companies foresee lucrative exports to Asia, where current gas prices are four times higher.
Inevitably, exporting gas will push U.S. prices upward. How much is hard to say. Even so, last week's report concluded exports would benefit the U.S. economy overall.
'Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased," it said. 'In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports."
In other words, whatever protective measures Wyden has in mind will do more harm than good.
Economics aside, trade policy has a moral aspect. For decades, the United States has used its military muscle to ensure international trade in oil, a commodity we eagerly imported. Now that we control an abundant fuel supply, will we withhold it from the international market?
If we do, we will harm our international trading partners, U.S. seaports that would benefit from exports and the U.S. economy in general. Just as free markets create winners and losers, so do political attempts to control market outcomes.