Congressman Ed Markey recently sent a letter to Energy Secretary Steven Chu inquiring into the possibility that natural gas exports may be harmful to the public interest (see press release, copy of letter). Markey’s concern is that exports will tend to push U.S. gas prices (currently around $3 or $4 per mmbtu) to international levels (in the $10 to $12 range), and higher prices would be harmful to industrial, commercial, and residential consumers of gas in the United States. The direction of his thinking is that, perhaps, the Department of Energy may want to deny LNG export licenses in an effort to keep natural gas resources in the U.S. economy.
Markey’s inquiry demonstrates a firm grasp on the basics of supply and demand, but is weaker on the economics of comparative advantage. In addition, his interest in potential LNG exports seems a bit selective, because the U.S. exports a lot of other things as well.
In 2010, Massachusetts exported over $26 billion worth of goods including optics, industrial machinery, electric machinery and pharmaceutical products. I wonder whether Congressman Markey is similarly concerned about how these exports are raising costs for U.S. producers and consumers? Alternatively, I’d like to hear his explanation of why these exports are okay, but other exports are not in the public interest.