Exporting Energy

I’m afraid the phrase “too soon old, too late smart” applies to me. To that should be added “too late informed.” I’m always discovering new information about topics I thought I knew thoroughly. Take Jerry Lee Lewis, for example. I’ve been a lifelong fan, and he is still my go-to guy when I seek nostalgia from You Tube. I don’t dose off when he preforms solo or does a medley with his cousin Mickey Gilley or even Tom Jones. Then the other day I discovered for the first time that Jerry Lee had a beautiful sister, Linda Gail Lewis, that could sing rock and roll with the best of them. Who knew? You Tube has a search feature; I suggest you check out Linda Gail.

Another recent discovery that shouldn’t have been was the discovery that the U.S. government, some time in the past when everyone was worried about oil and gas shortages, passed a law forbidding their export. We would keep our own while we asked others to export to us. I learned about this, I’m embarrassed to say, only when the question came up recently in connection with fracking and our new-found oil and gas supplies. Believe it or not, many people still think its a good idea to prohibit exports. I don’t know the details, and don’t really want to, but I have trouble believing that grown men and women don’t see the obvious: that oil and gas, like money, are fungible. They will flow to where they are needed most and where the price reflects that. Cut off one avenue of trade and another, less efficient one, will appear.

Another way to think about it is to recall that there are two ways a country can get goods: to make them domestically, or to import them and pay for them with exports of something else. In other words, goods can be made or obtained by trade. A prohibition on exports will close the trade option, which would only have been used if it were more efficient. Reducing exports by fiat will reduce imports, although the problem more often is prohibiting imports and thereby reducing exports.

We’ve long longed for “energy independence.” That desire makes sense so long as we are importing the major portion of our energy. Once we are approaching energy independence, total independence makes no sense. Before total independence is reached, it will surely become more profitable (efficient) to pay for some imports of energy with exports of beans or peaches or something. Comparative advantage generally doesn’t lead to complete specialization and attempts to force it will lower our standard of living. Even Jerry Lee found it advantageous to let his little sister sing occasionally.

Comments (3)

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  1. Mr. Freedom says:

    Government restrictions on trade never leave us better off, they only create distortions and inefficiencies in the market. And, now that we have tapped into a greater amount of our own gas and energy reserves, (no thanks to Obama administration drilling policies) we are now in a position that we can export oil. However, limiting exports hurts Americans. When will our government get out of the way and stop harming us?

  2. Frank says:

    Actually, it would seem that the Administration is pushing for exports now: http://www.forbes.com/sites/lorensteffy/2014/06/25/oil-exports-a-step-toward-21st-century-energy-policy/

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