Natural Gas Exports: Bad Idea? Part 3

| July 7, 2014 | 0 Comments

Let’s pick up our discussion on the upcoming export of US natural gas. 

As you may remember from our last article on the subject, the US Department of Energy has approved 7 liquefied natural gas (LNG) export facilities with 23 more waiting for approval.

Supporters of LNG exports claim the practice will strengthen the US economy by creating jobs and diminishing the trade deficit.  What’s more, exporting US natural gas will provide much needed energy to our overseas allies.

Let’s take a closer look at those claims…

First of all, I can’t deny that natural gas exports will likely strengthen the US economy as supporters suggest.   US jobs will be added and the trade deficit will likely decrease when exporting ramps up.

However, the benefits to the US economy would be far greater if our natural gas is fully implemented here first.

How so?

The US hasn’t fully developed the potential of natural gas here at home.  For example, our supply chain is still completely dependent on oil.  And as a result, we still import millions of barrels of oil a day from Canada, Saudi Arabia, Venezuela, and so on.

Fact is, US crude imports account for a very large percentage of the US trade deficit.  Between 2002 and 2012, approximately 40% of the annual trade deficit was due to high-priced oil imports. 

Imagine if we revamped our transportation system and supply chain to run off natural gas.  Long haul trucks, local delivery trucks, locomotive engines, even the cars we drive back and forth to work.  They could all run on natural gas instead of costly (and dirtier) imported oil.

Ridding the US of imported oil would drive the US trade deficit far lower than the exporting of natural gas ever will. 

The recent resurgence in US crude production makes this scenario even more attainable (as long we don’t export it too).

And that’s not all…

The jobs created by exporting natural gas would pale in comparison to the jobs created by switching the US transportation system to natural gas.   All those new natural gas burning engines must be designed, built, and installed.  Not to mention all the new supply infrastructure needed to make refueling possible.

But these enormous economic benefits won’t happen once large-scale natural gas exports start. 

Because when they do, the price of natural gas is going to rise- and substantially.  Anybody telling you otherwise is either biased or doesn’t understand how commodity markets work.

And once natural gas prices rise, the economic incentive to switch away from oil is gone. 

The US will miss an amazing opportunity to not only secure our supply chain and clean up the environment, but also get much closer to true energy independence. 

As you can see, there’s a lot more to this discussion than first meets the eye…

Judging by the poll I’ve been running on this website for the past few weeks, most of you agree that the US should export natural gas.  In fact, over 70% of you support the idea.

I can only surmise that your support of the plan is due to the investment potential in natural gas exploration companies.

You’re right, companies in this industry are going to benefit immensely.  And if you’re positioned correctly, you have a chance to make a windfall.

But let’s leave that discussion for next time.  Until then, feel free to write in and voice your opinion on US natural gas exports.  You can reach me at

You can also use the comment section at the bottom of this page.

Until Next Time,

Justin Bennett

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Category: Commodities

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.

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