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AEA Responds to the Competitive Enterprise Institute’s Blog Post: “AEA’s Unprincipled Stand”


CEI’s recent attack on our organization contains factual errors and mischaracterizations of our views.  We would like to take this opportunity to correct the record.

AEA is not simply “a business advocacy group.”  America’s Public Gas Association, an AEA member, represents not-for-profit, publicly-owned natural gas distribution companies in 36 states which serve over 5 million customers.  APGA represents consumers, a critical stakeholder in this debate.  It is not only energy-intensive manufacturers that have a stake in the outcome of exporting liquefied natural gas, but the millions of homeowners, renters, farmers, ranchers and small businesses that use natural gas every day.    

According to a recent study by Charles Rivers Associates, unchecked U.S. LNG exports could lead to a tripling of natural gas prices from current levels by 2030. This would raises consumers’ energy bills and reduce disposable income across the board.   Increased energy costs would harm competitiveness, regardless of whether a business competes domestically or with companies around the globe.  We agree with CEI’s view when it writes that the organization “makes the case for access to affordable energy.” We hope CEI will join us in our mission to keep natural gas prices affordable for American consumers and manufacturers.  

America’s newfound abundance of natural gas is powering a remarkable manufacturing renaissance, which to date has generated more than $100 billion of announced investment in over 120 different manufacturing projects.  Our natural gas advantage is directly responsible for the ten consecutive months of growth in the manufacturing sector.  America’s natural gas advantage is so significant that U.S. companies are beginning to “reshore” foreign operations back in the United States.  A wide range of foreign companies are locating manufacturing operations – and the jobs that accompany them – on our shores. 

It is important to note that the primary study supported by proponents of LNG exports, the Department of Energy-commissioned NERA Economic Consulting study, the Macroeconomic Impacts of LNG Exports from the United States, demonstrates the impact of exporting LNG and the resulting higher prices on U.S. consumers, businesses, and the economy as a whole.  Once one looks beyond the surface-level conclusion “exports provide net benefits to the U.S. economy,”  at winners and losers, the NERA report demonstrates significant negative externalities occur when exporting LNG, including: 

  • Wages and return on capital for individuals and businesses outside of natural gas production decline. 
  • Almost all sectors of the economy (other than natural gas production) suffer job losses and decreased output.

In short, the NERA report shows that the “losers” in this scenario are ALL other sectors of the U.S. economy and consumers, while the “winners” are producers and exporters of LNG. 

CEI’s argument hinges on the assumption that the export of domestically produced finished goods has the same impact on all consumers and businesses as the export of LNG.  This is not the case.  The resurgence in U.S. manufacturing dwarfs the benefits of exports alone.  A recent study by Charles River Associates found that increased manufacturing output from domestic natural gas creates twice the direct value to the economy and eight times as many jobs as gas exports alone.  This manufacturing renaissance could lead to 5 million additional American jobs, lowering our unemployment rate by as much as two or three percentage points.  

America’s Energy Advantage is a strong supporter of rules based trade and has emphasized the importance of natural gas as a strategic commodity that can be used as leverage to open overseas markets.  As we’ve pointed out in the past, why send our gas overseas and get nothing in return from our trading partners.  Let’s use our strongest bargaining chip, to open closed markets to ALL U.S. goods and services.  Sending American LNG to Asia and getting nothing in return undermines U.S. trade negotiators currently seeking to reach a high-standards agreement in the Asia-Pacific region.   

Exporting large volumes of this strategic commodity will raise domestic natural gas and electricity prices for every American, undermine manufacturing competiveness and cost the nation good-paying jobs.  Increased exports of all American products – not just natural gas – opens markets, grows the economy and raises living standards for all Americans.  Our natural gas energy advantage presents a once-in-a-generation opportunity to increase free trade across the world.  Policymakers should make sure that the United States has every tool at its disposal when negotiating access to closed economies.   

1. NERA Study, pgs 7 and 9.

2. NERA Study, pgs.7-9