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    WSJ Editorial: Business Against Exports: The self-interested campaign to bar LNG sales abroad

    February 14, 2013

    Editorial Board, Wall Street Journal

    Everyone loves American exports, or at least claims to, so it's worth highlighting the big business lobbying underway to limit the export of U.S. natural gas. Couched in the usual language about "energy security" and domestic jobs, the effort is as pure a special-interest play as you'll find.

    The lobbying goes under the flag of America's Energy Advantage, which is led by Dow Chemical, with an assist from the likes of steel (Nucor) and aluminum (Alcoa) producers. Now that America's shale-gas boom has reduced the domestic price of natural gas—which manufacturers use as a feedstock and to power their plants—these companies want the Obama Administration to limit or block exports of liquefied natural gas.

    Specifically, they want the White House to limit the number of LNG export terminals. The U.S. currently exports no LNG, although 16 proposed facilities are seeking Department of Energy approval. A December report commissioned by the Energy Department found that exports would provide net economic benefits in more jobs, tax revenue and investment.

    America's Energy Advantage is nonetheless warning that exports could cause U.S. natural gas prices to soar by as much as 54%, based on little evidence, while trashing exporters for putting a "quick buck" ahead of U.S. manufacturing jobs. The group is hitting Capitol Hill hard, and one result was Senate Energy and Natural Resources Chairman Ron Wyden's (D., Oregon) Tuesday hearing to vilify gas exports. Dow CEO Andrew Liveris also carries insider clout as a member of President Obama's Export Council, of all paradoxical memberships.

    Dow's role is especially notable given its relatively recent rededication to production in America. When U.S. gas prices began to climb in 2000 (hitting nearly $11 per thousand cubic feet in 2008), Dow spent a decade relocating its manufacturing to the Middle East and Asia. That made perfect business sense at the time.

    Amid the hydrofracking boom that has cut U.S. natural gas prices to $3.35, however, Dow has since decided to commit as much as $4 billion to U.S. production. With so much capital at risk, Mr. Liveris wants to limit exports to guarantee what is in effect a price ceiling on his feedstock.

    Or at least sometimes. Dow's lobbying secret is that it supports LNG exports when it suits its bottom line. Dow has a 15% equity stake in the proposed Freeport LNG terminal in Texas, which has already signed export contracts with Japanese utilities and British Petroleum . The Freeport project is at the front of the Energy Department approval queue. And because it began as an import facility—and thus is mostly built—it will be able to export more quickly than other competitors. Sound like a "quick buck"?

    Dow Vice President George Blitz tells us the company is "pro-free-trade" and is simply looking for the "sweet spot" in the export market. He means sweet for Dow but sour for everyone else. Dow recently withdrew in a huff from the National Association of Manufacturers because NAM to its credit continues to support gas exports. The American Chemistry Council is also sticking to its free-trade principles on exports.

    The danger is that Mr. Liveris and his allies may be offering Mr. Obama a tempting solution to his energy political dilemma. The President has jumped on the natural-gas bandwagon that his policies have had nothing to do with, but his green supporters still hate fracking. By limiting exports, the White House would reduce the market for U.S. natural gas and therefore reduce the drilling for new supplies.

    Thus does big business lock arms with the likes of the Sierra Club, whose real goal is to shut down all fracking in a way that would force Dow, Nucor and Alcoa entirely overseas. Remember what Lenin said about businessmen and the rope to hang themselves?

    The last thing American business needs is politicians deciding when and where companies can sell their goods. U.S. gas supplies are vast, and production was increasing so rapidly a year ago that prices fell to $2 due in large part to an unusually warm winter. If demand for U.S. LNG takes off, natural gas prices will rise, which will lead to more production.

    Dow and friends would do more good for themselves and U.S. job creation by lobbying Mr. Obama to stop his EPA from trying to regulate shale-gas drilling to death. Their plea for government limits on exports is short-sighted—and embarrassing.


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