For the Broad Benefits of Free Energy Trade
Posted January 25, 2017
During his Senate confirmation hearing last week, former Texas Gov. Rick Perry, President Trump’s nominee to be energy secretary, lauded the U.S. energy renaissance and underscored the important role of oil and natural gas exports in supporting domestic production and economic growth. Specifically, on liquefied natural gas exports, here’s what Perry said at about an hour and 33 minutes into the session:
“My understanding from having conversations with [President] Trump, is that he truly is an all-of-the-above supporter of American energy, and to support, develop, and promote that energy resource, liquefied natural gas being one of those.”
Later, addressing a senator’s concern about the potential level of U.S. LNG exports, Perry said (2:39 mark):
“Senator, what I will commit to is finding ways to make sure that we don’t artificially affect supply and demand. What I will suggest to you is that there are decisions that have been made in Washington, D.C., that have artificially affected supply and demand … [I]f we produce it in America, it makes abundant good sense to me for us to sell it to the world.”
We’re talking one commodity here, LNG. But the principle holds for an array of U.S. commodities sold to willing buyers abroad – that free trade brings overseas wealth into this country, broadly benefitting the United States and American consumers.
Exporting oil and natural gas helps support domestic production, jobs in our industry and the vast energy supply chain. Energy abundance meets demand here at home, at lower costs for consumers, while also letting U.S. energy access global markets, strengthening America’s stature in the world. This is the emerging picture since crude began freely trading last January and with growing shipments of LNG during 2016. The U.S. Energy Information Administration (EIA) reported that U.S. crude exports were rising and heading for an expanded list of destinations:
EIA’s Annual Energy Outlook 2017 projects that sometime in the mid-2020s the U.S. will become a net energy exporter, largely because of declining oil imports and growing LNG exports:
These are positive trends, made possible by allowing U.S. energy to reach global markets.
Trade matters. Access to energy markets matters. U.S. exports of finished petroleum products increased 144 percent between 2006 and 2015 – which, again, represents wealth from overseas flowing into the United States to support jobs and families here. API Chief Economist Erica Bowman:
“U.S. oil and natural gas producers’ ingenuity has transitioned our nation from one of energy scarcity to one of energy abundance. Unlike a decade ago, the issue today is not from where will we procure our energy needs, but rather how can we, as a nation, benefit most from our abundant oil and natural gas resource. How can we create and sustain jobs, increase economic output while also advancing national security? The key to all of this is free trade. Today, our nation has the opportunity to supply the world with affordable energy as well as energy-intensive manufactured goods. Our nation has entered a new era where we are no longer bound by constraints on supply, but rather bound by constraints on demand. We need more free trade agreements so that we can compete on a level-playing field in more markets across the globe in order to more fully realize our nation’s energy production potential.”
The president’s new “America First Energy Plan” strikes a number of good notes in its call for tapping America’s energy riches to benefit consumers as well as the broader economy. We need access to energy reserves and a regulatory approach that properly oversees safe production without needlessly obstructing it through duplicative and potentially counterproductive measures.
American energy also should be able to reach new markets abroad. Freely trading U.S. crude, LNG, petrochemicals and finished products made from petroleum and natural gas is key to strengthening U.S. competitiveness around the globe, economic growth and domestic energy production.
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and six grandchildren.
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