By Kevin D. Williamson
Monday, April 29, 2019
The United States is producing beaucoup natural gas — you
knew that. But do you really know how much? The United States is now the
world’s largest natural-gas producer by far, with No. 2, Russia, nowhere close.
The growth alone in U.S. natural gas is equal to about twice the annual
production of Iran, which is the world’s third-largest producer.
So why are people in New England importing natural gas
from Russia?
Welcome to the batty world of trade protectionism.
The United States has on the books and enforces an
antediluvian piece of legislation known as the Jones Act, signed into law by
that great malefactor of his day, Woodrow Wilson. The Jones Act forbids the
transportation of goods, commodities, or people between U.S. seaports unless
the vessels used are manufactured, registered, flagged, and owned in the United
States — and owned and crewed by U.S. citizens or permanent residents. It’s the
reason why a cruise ship picking up passengers in Fort Lauderdale can’t
disembark them in Key West — and also the reason why we can’t get natural gas
from the Gulf Coast to users in the Northeast and in Puerto Rico.
Thanks to our environmentalist friends, we do not have
the pipeline capacity to take U.S-produced natural gas from the places where it
is processed to the places where the people are. This has some pretty serious
consequences: Con Ed has just announced that it cannot get enough gas to serve
new customers in the New York City suburbs, which has meant in effect a
moratorium on much new residential construction, which obviously can’t happen
without utility connections. One workaround has been to put liquified natural
gas (LNG) on containers to take it where it is needed.
And that’s where the Jones Act is a problem. The number
of tankers equipped to handle U.S.-made LNG that satisfy all of the conditions
of the Jones Act is — here, the math gets pretty easy — zero.
There are Americans producing previously undreamt-of
amounts of natural gas and eager to sell it. There are other Americans eager to
buy it. And in the middle of all that? Russians.
Why? Because economic protectionism is moronic, a consistent failure of a
policy.
The Jones Act is a sop to a small slice of U.S.
shipbuilders and operators — and a gigantic tax on people and companies who
transport things and use electricity. It is one of the bone-dumbest laws on the
books, pure corporate welfare from a time before penicillin.
There is a very useful concept in political economy:
concentrated benefits vs. dispersed costs. The people who benefit from the
corporate welfare — whether it’s the Jones Act, farm subsidies, or the U.S.
Export-Import Bank — benefit bigly. Everybody else pays, but it’s spread around
thin, so people don’t notice it as much — except when there’s an unusual cold
snap in New England and those poor dumb frozen Yankees are having to bring in
fuel from Siberia.
Making energy more expensive is bad for everybody —
consumers, manufacturers, farmers. (Yes, farmers: It takes a lot of power to
run those irrigation pivots.) The Trump administration has made ramping up U.S.
energy production a centerpiece of its domestic economic agenda. The president
himself has a phobia about trade deficits. That’s the wrong thing to worry
about, but if you are worried about it, then it’s worth noting that petroleum
imports have been one of the largest contributors to our trade deficits over
the years — often the single largest contributor. And we’re hampering the
distribution of U.S.-produced natural gas for purely political reasons.
There are some very capable people on Trump’s
economic-policy team, and there are also some neo-mercantilist cranks. The
president is considering issuing a Jones Act waiver to enable the freer flow of
U.S.-produced natural gas. He should do himself and the country a favor and
remember that when it comes to energy, more is more.
No comments:
Post a Comment