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Letter of Opposition to H.R. 6, “The Domestic Prosperity and global freedom act”

June 23, 2014

The Honorable John A. Boehner
Speaker of the House
H-232 U.S. Capitol
Washington DC, 20515

The Honorable Nancy Pelosi
Minority Leader
H-204 U.S. Capitol
Washington, DC 20515

RE:  Letter of Opposition to H.R. 6, “The Domestic Prosperity and global freedom act”

Dear Speaker Boehner and Leader Pelosi:

America’s Energy Advantage (AEA) is a trade association representing many of the world’s leading manufacturers and commodity producers, as well as the United States’ publicly-owned natural gas distribution companies.  As a strong supporter of rules based trade that is consistent with the public interest, we are writing to voice our opposition to H.R. 6, legislation that will harm economic growth, job creation and American manufacturing.  We appreciate your consideration of our views.  

The changes to the Natural Gas Act proposed by H.R. 6 are unnecessary and harmful to the public interest of American consumers, manufacturers and the economy.  Furthermore, the legislation has been rendered moot by the Department of Energy’s recent announcement of changes to its process for reviewing LNG export applications to non-FTA nations. 

As we have repeatedly stated, allowing the unlimited and unchecked export of LNG to nations that have yet to sign free trade agreements with the U.S. will undermine the efforts of U.S. trade negotiators to open closed markets to all American goods and services.  Why should the United States send American natural gas to our overseas competitors – an incredibly valuable strategic commodity – without receiving any trade concession in return?   

The legislation would also expedite the export of nearly half of U.S. domestic natural gas production to our overseas competitors.  Exports of this scale will raise domestic natural gas and electricity prices for every American, undermine our manufacturing competiveness and cost the nation good-paying jobs.  As Warren Buffet recently stated, "I don't think if you have a national treasure you should go around looking for ways to export it if you know it's finite and you know 100 years from now or 200 years from now your great-great-great-grandchildren are going to be looking back at the policies you followed and wondering, 'Why did they decide to get rid of a very precious natural resource?’"

Equally concerning is that H.R. 6 establishes an arbitrary deadline for DOE to decide on LNG export applications.  An artificial deadline is unworkable and unnecessary, especially considering that the Department has just announced changes to the existing process that are supported by manufacturers and exporters alike.  Such a deadline would not provide DOE with adequate time to review the complex economic issues at stake.  

There are other important points to consider about H.R. 6 and unlimited LNG exports:

Supply disruptions and price spikes in the domestic market are already occurring without large-scale LNG exports:

  • Gas prices have doubled since the first LNG export application was approved and parts of United States experienced a full-blown gas crisis this past winter – In New York and other areas of the northeast, a supply shortage of natural gas has caused price spikes and even rationing.
  • U.S. gas markets are extremely volatile, with prices surging as high as $8/MMbtu – a 250 percent increase from just a year ago.
  • This past winter’s propane crisis in the Midwest is a cautionary lesson for U.S. policymakers. The U.S. sent a record-high 20 percent of domestic supply overseas last fall. Supplies plunged to historic lows, and the tough winter sparked shortages, skyrocketing prices and suffering for families, farmers and businesses. A similar crisis in natural gas would be far more painful, as natural gas fuels millions more homes, farms and businesses than propane.

H.R. 6 also places our remarkable manufacturing comeback at risk:

  • Stable and affordable natural gas prices have generated more than $100 billion of announced investment in over 120 different manufacturing projects.
  • Affordable domestic natural gas is directly responsible for the ten consecutive months of growth in the manufacturing sector, reshoring businesses back to the U.S. and carrying the potential to create 5 million good-paying jobs by 2020. 
  • We have a once-in-a-generation opportunity to restore American preeminence in manufacturing, but that would all be threatened by an approach that would allow the export of half of current domestic gas production. 

U.S. LNG exports to Ukraine are simply a false hope: 

  • No LNG export facilities yet exist in the continental U.S. and exports will not begin to flow in earnest until 2018. 
  • A much better option for weakening Putin is to export American hydraulic fracturing technology to our Ukrainian allies so they can develop their own domestic shale gas resources from the more than 40 trillion cubic feet of technically recoverable natural gas.

In approaching the complex decision of how much American natural gas should be exported to our global competitors, especially those who have not yet negotiated reciprocal free trade agreements, the United States should consider the aggregate impact that large-scale natural gas exports will have on the U.S. domestic gas supply. 

Any changes to this process before DOE has the time to complete its current review under proposed rules would undermine the ability of DOE to administer the law in a way that broadly optimizes outcomes for consumers, manufacturers and the U.S. economy as a whole. 

The benefits of this newfound natural gas abundance to our domestic economy – robust job creation, manufacturing investment, affordable consumer prices and lower utility bills – are in the public interest of all Americans, and the export volume of this valuable national resource should be considered in this light.  A strong American economy commands a position of strength in geo-politics and the global economy. 

For these reasons, and those enumerated above, we encourage all Members of the House of Representatives to oppose H.R. 6.

Thank you for your consideration of our views.

America’s Energy Advantage