U.S. Energy Secretary Ernest Moniz touted the Obama Administration’s “all of the above” energy strategy Wednesday at the National Press Club. Yet he all but ignored America’s fossil-fuel energy boom, where abundant natural gas and oil resources are being developed.
Secretary Moniz offered no hope of lifting the obsolete crude oil export ban, no indication of accelerating the approvals of Liquefied Natural Gas (LNG) export licenses, and no signal that the Keystone XL pipeline is any closer to approval. The administration cannot pursue an “all of the above” approach to national energy policy by ignoring these three key energy issues.
Secretary Moniz, who knows better, nevertheless spent the vast majority of his National Press Club speech talking about fuel efficiency, renewables, and heavily-subsidized projects.
These issues aren’t inconsequential, but the Secretary entirely brushed over the value of U.S. oil and gas – fuels that are the main source of energy for running our cars and trucks, heating our homes and offices, and powering our factories. More and more U.S. workers are extracting and transporting American oil and gas every day, such that the industry is a key source of job creation and growth in an otherwise sluggish economy. And these resources are in such abundance now that it makes very good economic sense to allow markets, rather than government bureaucrats, to determine how and where we export them.
Take the ban on crude oil exports. The ban was enacted decades ago in completely different geopolitical and economic circumstances that are simply no longer relevant. The Brookings Institution, a nonpartisan think tank, published a research paper last month urging President Obama to ask Congress to lift the ban on crude oil exports. They wrote: “Domestic consumers do not substantially benefit from an export ban, and U.S. oil producers may soon be affected negatively by it.”
The report concludes that lifting the ban would yield substantial economic and political benefits. In addition, a new study by Resources for the Future concludes that lifting the ban on crude exports is likely to reduce domestic gasoline prices. Yet when Secretary Moniz was asked directly about reexamining the ban, he was noncommittal.
Similarly, he was silent on LNG exports until questioned, and then answered with a recitation of how the license approval process works. The department reviews these applications to determine if they are in the “public interest.” The sluggish status quo, however, is simply not cutting it. There are over 20 applications to export LNG waiting to be approved, some of which have been sitting in the queue for well over two years.
The fact is that recent technological advancement in extracting gas from shale has given us a huge strategic energy advantage. We now have the world’s largest recoverable shale gas reserves, sufficient to meet our domestic needs while enabling us to benefit from exports of LNG as well. Just look to the north in Alaska where, for the first time in decades, the state is poised to tap one of the largest known reserves of natural gas. Thanks to the leadership of Governor Parnell and the state legislature, Alaska is poised to move ahead with a $45 billion pipeline and infrastructure project that will provide the state with plentiful natural gas for generations to come while also establishing it as a world leader in gas exports. Domestic prosperity and LNG exports are not mutually exclusive.
Secretary Moniz proudly cited the recent five-year anniversary of the signing of the American Recovery and Reinvestment Act – an act intended to stimulate the U.S. economy, in part by creating jobs. Why then, does he fail to speak to the thousands of jobs that could easily be created by implementing the right energy export policies?
Another issue Secretary Moniz side-stepped was approval of the Keystone XL pipeline. The pipeline would create significant economic benefits for the U.S. if approved, including lower energy prices for Americans. The State Department’s latest report has confirmed that the pipeline’s approval would not significantly impact carbon emissions, which has been the administration’s biggest concern with the pipeline.
Boasting about pouring billions into government subsidies for pilot projects to boost alternative fuels, which have limited practical utility until someday far in the future, while ignoring important issues around oil and gas which are critical to powering the nation today, is tantamount to an abdication of leadership.
Dr. Margo Thorning is senior vice president and chief economist with the American Council for Capital Formation and director of research for its public policy think tank.