Compelling case for exporting crude oil and LNG

America , along with its oil and gas producers, energy supply chain companies, and millions of American workers, are quite literally “missing the boat” as a result of the federal government-imposed ban on crude oil exports, and severe limits on liquefied natural gas (LNG) exports. Eliminating these restrictions would set the stage for dramatically more rapid growth in energy production and for the supply chain businesses that support energy operations.

Applications to export as much as 25 billion cubic feet per day (bcf/d) equivalent of natural gas are stuck in the Department of Energy’s limbo of lengthy review processes.  Recently released studies and analysis indicate that each additional 10 bcf/d of natural gas produced to meet export demand would create 110,000 new jobs and $20 billion annually of new business for the energy supply chain – construction contractors, equipment companies, materials suppliers and production service providers. And with other nations rushing to fill the void left by the absence of U.S. exports, this window of opportunity will close and the business lost if we don’t accelerate processing of these applications.

{mosads}On the crude oil front, research firm IHS Energy conservatively projects that enabling exports would cause U.S. production to increase by an average of 1.2 million barrels per day by 2016, which would result in an additional $86 billion of GDP per year. With models showing about half of production-related output being created by the energy supply chain, this yields approximately $40 billion more per year in potential business for supply chain companies, with about another 200,000 new jobs.

Current government-imposed export constraints are relics of an earlier time when American crude oil and natural gas production were dwindling and the outlook was for increasing energy shortages, greater imports, higher costs, and a market that was hostage to the whims of unfriendly countries.  What a difference a few years have made! Today, thanks to new technology and investment, domestic crude oil production has swamped the nation’s refining capacity, and natural gas is so abundant that producers have throttled back on drilling because our over-supplied market has resulted in depressed prices and limited returns on investment.

Both of these bans could be lifted by either executive action (i.e., the proverbial pen and the phone), or by a two-paragraph act of Congress. So what’s the problem?

In the waning days of the current Congress, activity progressed on both fronts. The House actually passed in June a bi-partisan bill sponsored by Rep. Cory Gardner (R-Colo.) to expedite LNG export approvals. A similar bill sponsored by Sen. Mark Udall (D-Colo.) made less progress in the Senate, not least because Majority Leader Harry Reid (D-Nev.) passed the word that he would not permit it to come up for a floor vote. Could it be that deference is being paid, in a tight election, to the political faction that believes that neither America, nor for that matter any country, should be either producing or consuming fossil fuels?

Think about it. Together, these two policy changes would create growth in construction, equipment, supplies and services markets of $60 billion while increasing U.S. GDP by well over $100 billion annually, create hundreds of thousands of well-paying jobs, and enhance American energy security by further decreasing net imports of energy.

This clearly calls for industry stakeholders, and Americans generally, to speak out in favor of energy exports. Those with a chance to collar their candidates for the House or Senate as they campaign in their neighborhoods, should tell them that crude oil and natural gas exports will create jobs and economic growth in theirs and in every district and state in America.

Mack is president of the Energy Equipment and Infrastructure Alliance (EEIA), which advocates for the shale oil supply chain.