Author: Margo Thorning

Dr. Margo Thorning has frequently testified as an expert witness on capital formation, tax, energy and environmental policies before multiple U.S. congressional committees. She has also traveled coast to coast to present findings to state and local lawmakers, business organizations and the media on the economic impact of climate change policies on local job and economic growth.

Capitalize on Robust U.S. Natural Gas Supply

DOE’s decision to allow Freeport LNG to export liquefied natural gas  to countries that do not have a Free Trade Agreement(FTA) with the U.S. is to be commended.   However, in order to ensure that the U.S. receives the maximum benefit from our vast supplies of natural gas, DOE and FERC should rapidly approve the remaining 20 export applications. New research shows that allowing larger amounts of LNG to be exported will generate an average of 73,100 to as many as 452,300 new jobs in the U.S. over the 2016-2035 period, thus a slow DOE/FERC approval process will hinder economic recovery (see http://www.api.org/news-and-media/news/newsitems/2013/may-2013/~/media/Files/Policy/LNG-Exports/API-LNG-Export-Report-by-ICF.pdf Furthermore, by moving slowly in reviewing permit applications, the U.S. is likely to reduce its global influence and share of natural gas markets since our potential customers abroad may seek other suppliers.  In addition, U.S. companies seeking export permits face increased uncertainty and higher hurdle rates for the  large investments in export facilities required if permits are not approved expeditiously since global natural gas markets can change rapidly.   Finally, the language of the DOE order (see page 7 at http://energy.gov/fe/downloads/fe-docket-no-10-161-lng) suggests that DOE may monitor natural gas prices as it considers export applications rather than letting markets determine…

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What People Really Want When It Comes to Natural Gas Exports

The University of Texas recently published an interesting study on American views towards natural gas, hydraulic fracturing, and liquefied natural gas exports.  This study will inevitably be used by anti-LNG advocates to support their position. The study was circulated to reporters by Senate Energy and Natural Resources Committee majority staff illustrate that Americans don’t want natural gas exports. The study shows by an almost three-to-two margin Americans are opposed to the exports of natural gas.  To summarize the study, this would be correct: 39 percent said they opposed to natural gas exports and 28 percent said they’re for it. However, like any good poll, the study asks the individuals just how familiar with natural gas they are.  It turns out that those who are familiar with natural gas production (ie. “fracking”) are supportive of LNG exports, and even people who describe  themselves as “Active Environmentalist” are evenly split on the issue. The people who are not familiar with “fracking” are opposed towards it, and, perhaps tellingly, the strongest group opposed to LNG exports is “greater than age 65”. What do we make of this?  The study also asked individuals their attitudes towards regulation of natural gas and the numbers indicate…

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Dubious Campaign Against LNG Exports Ignores Net Benefits of Free Trade

A dubious campaign by America’s Energy Advantage seeking to restrict expansion of liquefied natural gas (LNG) exports ignores fundamental economic and market facts. AEA relies on a gross overestimation of U.S. domestic demand for natural gas, estimating it to be more than 50% higher than estimated by the U.S. Department of Energy in the AEO 2012 report. Contrary to America’s Energy Advantage’s assertions, DOE notes that the U.S. has a robust 100-year supply of natural gas at today’s consumption level, which is more than adequate to meet the needs of manufacturers and utilities. The recent DOE report reinforces other economic findings that under all LNG export scenarios, the U.S. economy benefits even when factoring in the impact of price increases:  “Across all these scenarios, the U.S. was projected to gain net economic benefits from allowing LNG exports. Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased. In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports.  In all of these cases, benefits that come from export expansion more than outweigh the losses from reduced capital and wage income to U.S. consumers,…

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LNG Export Study Released

The Long awaited LNG export study commissioned by U.S. Department of Energy was released yesterday (http://www.fossil.energy.gov/programs/gasregulation/reports/nera_lng_report.pdf). The results  were not surprising, LNG exports will benefit  the overall U.S. economy: “Across all these scenarios, the U.S. was projected to gain net economic benefits from allowing LNG exports. Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased. In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports. In all of these cases, benefits that come from export expansion more than outweigh the losses from reduced capital and wage income to U.S. consumers, and hence LNG exports have net economic benefits in spite of higher domestic natural gas prices. This is exactly the outcome that economic theory describes when barriers to trade are removed.” (page 1) LNG or other energy product exports should not be seen any different than exporting cars or corn. Wall Street Journal’s December 7 editorial (http://online.wsj.com/article/SB10001424127887324001104578163491822943984.html?user=welcome) was right on point: “Not that the report will mute the critics, who include Massachusetts Congressman Ed Markey and Oregon Senator Ron Wyden. Mr. Markey worries that exports will allow a “massive wealth transfer…

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Cash Flow Matters

Investment in energy production driving economic growth in Midwest and Great Plains states. So why would lawmakers consider dimming this one this one bright spot in the economy by targeting and eliminating many of the tax code provisions that have facilitated investment and jobs? Accelerated depreciation, deductions for interest expense, LIFO for inventory accounting should not be a trade off for corporate income tax rate cuts. America’s energy seen adding 3.6 million jobs, 3 percent GDP Daily Herald – August 19, 2012 On the eastern bank of the Mississippi River, about an hour upstream from New Orleans, the outline of Nucor Corp.’s new $750 million iron-processing plant is rising between fields of sugar cane and sweet gum trees. Surveying the facility from the road, Michael Eades, president of Ascension Economic Development Corp., says it’s part of a wave of investment lured by low natural gas prices to this stretch of Louisiana’s industrial riverfront. Companies such as Westlake Chemical Corp., Potash Corp. of Saskatchewan Inc. and Methanex Corp. have projects in the works. Ormet Corp. reopened an alumina refinery last year, bringing back 250 jobs. “We’re just seeing an incredible amount of activity,” said Eades, who tallied $1.1 billion in new…

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