DEBATE: LNG EXPORT PAUSECongress Should Demote the DOE and Unleash LNG Exports
Late January’s Department of Energy (DOE) move to temporarily pause pending requests to export liquefied natural gas (LNG) outside the United States has elicited not only a firestorm of criticism, but also proposals in Congress to reverse the DOE action. At stake is a burgeoning industry with domestic and international significance, both economically and geopolitically.
Last Friday’s [26 January 2024] Department of Energy (DOE) move to temporarily pause pending requests to export liquefied natural gas (LNG) outside the United States has elicited not only a firestorm of criticism (including from us), but also proposals in Congress to reverse the DOE action. Just two days ago, for example, House Energy and Commerce Committee Chair Cathy McMorris Rodgers announced that the House would soon vote on a measure to overturn the LNG pause, while a group of Republican senators introduced legislation to eliminate DOE’s power to block natural exports altogether.
At stake is a burgeoning industry with domestic and international significance, both economically and geopolitically. The recent growth in LNG exports from the United States should not be taken for granted—the fact that the United States went from importing LNG just fifteen years ago to the world’s largest exporter is an amazing feat and a testament to the powerful growth enabled by (mostly) unhindered production and free trade.
As I explained in a new column for The Dispatch and in a 2013 Cato briefing paper on US energy export restrictions, systemic reform—not simply a narrow reversal of this week’s DOE pause—is needed here. That’s because current law (the Natural Gas Act of 1938 and its amendments) provides DOE—and thus any president who might just be in the middle of a close reelection campaign—with essentially unlimited discretion to block natural gas exports destined for countries without a free trade agreement (FTA) with the United States on undefined “public interest” grounds.
Given that many US LNG export shipments are “destination flexible,” and that most of the world’s biggest and most geopolitically‐important LNG consumers—including in Europe and Asia—don’t have a US FTA, getting a DOE‐approved export license is essential for US LNG projects. That fact, in turn, makes the approval process an almost‐irresistible point of attack for anti‐fossil fuel activists and any politician wanting to win their support. Reforming that process to take DOE—and thus politics—out of the equation (and thus put far more knowledgeable private investors in charge of these important, billion‐dollar projects) is a smart and obvious move.
There is, moreover, precedent for just this kind of reform. Back in 2013, for example, I advocated for eliminating the outright ban on US exports of crude oil—something Congress finally did via a 2016 law that allowed the president to block US oil exports only in times of a declared national emergency. (Who says Congress doesn’t work fast?!) After decades of exporting virtually no crude oil, the United States has become a global oil export powerhouse, improving both domestic and global energy security.
