• For much of the last 40 years US politicians have railed against the countries of OPEC for restricting exports of oil for their own economic gain. Just 7 years ago, more than a dozen Senators, from both parties, introduced a bill calling for prosecution of OPEC on antitrust grounds.
• Last summer, the media ran a blitz of stories about China impeding exports of rare earth metals in order to benefit its domestic industries that use rare earths. The US joined with Japan and the European Union to file a complaint against China’s rare earth export restrictions.
• Six years ago, the US was looking at rapid acceleration of liquefied natural gas imports to satisfy our growing demand for gas-fired generation and industrial natural gas uses. American diplomats and business people were pushing to open up new sources of LNG imports from South America and the Middle East.
with American natural gas production now taking off and prices declining, many domestic businesses and politicians are lobbying to abandon those same principles of free trade. In fact, some of the same companies that just a few years ago were clamoring for LNG import terminals in the US and more LNG trade worldwide are now leading the charge to limit US exports of our newfound natural gas abundance.
Exporting LNG benefits the US economy by selling gas where it can be put to its highest value use and capturing some of that value. The price of natural gas in Japan – our resource-poor ally and friend — is more than 3 times higher than in the US, and that difference is much greater than the cost of shipping them LNG. Locking the gas into the US directs it to uses that the advocates admit are only economic when gas is cheap, while the value of that gas is far higher in Japan and other countries that rely on international energy trade to fuel their economies. When we create value by exporting natural gas, some of the value is captured as profits to domestic producers and some as wages, such as to the workers who build and operate the export facilities and tankers. But it also boosts the demand for our natural gas, creating additional jobs in gas exploration and production.
The new opponents of free trade in energy — now that we are becoming exporters – are being taken seriously enough that the Department of Energy felt compelled to solicit a study of the economic costs and benefits of exporting natural gas. Not surprisingly, the study finds that allowing natural gas exports is good for the US economy.
But the narrow economics of exporting LNG is not the strongest argument against restricting natural gas exports. The pure hypocrisy of such restrictions — after decades of the US arguing for free trade in resources – would undermine any claim that US policy is based on economic principles rather than pure self-interest (albeit misguided). We are, in fact, still dependent on imports for nearly half the crude oil we use. That is why the US continues to argue that Venezuela, Saudi Arabia and other oil-rich countries should export more crude and stop using their abundant supplies to maintain artificially low domestic gasoline and diesel prices.
Exporting LNG will benefit the American economy by creating economic value and capturing much of that value in the US. But just as important, exporting LNG will show that the US energy policies are based on sound economic principles, not the hypocritical politics of cheap energy .
 Not all economists think that the US will actually end up exporting much LNG, because the new shale gas technology will soon be applied in China and other locations, lowering world prices for LNG. See the recent article by Frank Wolak. But even if that view is right, the US has sacrificed its principles for a policy that has little practical effect.
Severin Borenstein is E.T. Grether Professor of Business Administration and Public Policy at the Haas School of Business. He has published extensively on the oil and gasoline industries, electricity markets and pricing greenhouse gases. His current research projects include the economics of renewable energy, economic policies for reducing greenhouse gases, and alternative models of retail electricity pricing. In 2012-13, he served on the Emissions Market Assessment Committee that advised the California Air Resources Board on the operation of California’s Cap and Trade market for greenhouse gases. Currently, he chairs the California Energy Commission's Petroleum Market Advisory Committee and is a member of the Bay Area Air Quality Management District's Advisory Council.