Walter E. Williams

Why is it that natural gas sells in the U.S. for $3.94 per 1,000 cubic feet and in Europe and Japan for $11.60 and $17, respectively? Part of the answer is our huge supply. With high-tech methods of extraction and with discovery of vast gas-rich shale deposits, estimated reserves are about 2.4 quadrillion cubic feet. That translates into more than a 100-year supply of natural gas at current usage rates. What partially explains the high European and Japanese prices is the fact that global natural gas markets are not integrated. Washington has stringent export restrictions on natural gas.

Naturally, the next question is: Why are there natural gas export restrictions? Just follow the money. According to OpenSecrets.org, The Dow Chemical Co. "posted record lobbying expenditures last year, spending nearly $12 million, and is on pace to eclipse that number this year." The company has spent hundreds of thousands of dollars contributing to the political campaigns of congressmen who support export restrictions. Natural gas is a raw material for Dow. It benefits financially from cheap gas prices, which it fears would rise if Congress were to lift export restrictions. Dow argues, "Continuing optimism for U.S. manufacturing is founded on the prospect of an adequate, reliable and reasonably priced supply of natural gas." Of course, Dow and other big users of natural gas get support from environmentalists, who are anti-drilling and anticipate that export restrictions will serve their ends.

Big natural gas users and environmentalists have foreign allies, suggested by the statement of Saudi Prince Alwaleed bin Talal, who told Saudi Arabia's oil minister, Ali al-Naimi, that rising American shale gas production is "an inevitable threat." Nigeria's oil minister, Diezani Alison-Madueke, agrees, saying that U.S. shale oil is a "grave concern." In light of these foreign "concerns" about U.S. energy production, one wonders whether foreign countries have given financial aid to U.S. politicians, environmentalists and other groups that are waging war against domestic oil and natural gas drilling. It would surely be in their interests to do everything in their power to keep the West dependent on OPEC nations for oil and gas.


Walter E. Williams

Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of 'Race and Economics: How Much Can Be Blamed on Discrimination?' and 'Up from the Projects: An Autobiography.'
 
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