Politics & Policy

End the Natural-Gas Blockade

A thought experiment on the politics and economics of blockades

The top Kremlin strategic priority right now is to prevent the export of American natural gas to Europe. Natural-gas prices in Europe are more than double those prevailing in the United States, and by maintaining a near-monopoly on overpriced European natural-gas imports, the Putin regime assures itself of a vast source of revenue. This is allowing it to rule and rearm Russia without permitting the freedom necessary to develop the country’s human potential. Furthermore, so long as Europe is kept critically dependent upon Russia for fuel, Moscow can paralyze and render ineffective any Western response to its plans for conquest, whose initial steps are currently being demonstrated in Ukraine. More, and much worse, is certain to follow so long as Europe remains helpless.

Meanwhile, on this side of the Atlantic, the fracking revolution has made available vast natural-gas supplies, much more than we could ever need. These could be exported at great profit to us and great benefit to Europe, taking away Putin’s funding, destroying his leverage, and eliminating a regressive tribute that is impeding the European, and thus global, economic recovery. Thirty applications have been made to establish natural-gas export facilities in the United States, but, despite desperate European pleas for action, only one has been fully approved by all the relevant departments of the Obama administration.

The situation could not be more urgent. Issuing the permits would send out a market signal that could crash Russia’s oligarchy-owned gas company and stop Putin dead in his tracks. Yet despite this clear economic and national-security imperative, there are still those who justify the administration’s refusal, by claiming that allowing American natural-gas producers to export their product would actually damage the national interest. According to them, enabling natural-gas exports would harm Americans, by causing their fuel prices to rise.

Let us consider the logic of this argument. If stopping exports of natural gas really helps Americans by keeping their gas prices own, why not extend the principle and ban all exports? Then, according to such wisdom, everything would become cheaper. If we stopped American farmers from exporting a large part of their product and instead forced them to dump it on the domestic market for whatever price they could get, the commodity price of corn and wheat would crash. Not only that, if we stopped industrialists from exporting their products, all sorts of manufactured goods would become available at fire-sale prices. Imagine the benefits: bread at ten cents a loaf, new automobiles for under $3,000, Boeing jets at 80 percent off list price . . . the list is endless.

Such a plan would certainly be feasible. The United States has the largest and best navy in the world. Using just a small portion of it, we could blockade all American ports. It will be recalled that with a much smaller fleet at its disposal, and lacking any assistance from aerial or satellite reconnaissance, the federal government was able to blockade Southern ports rather effectively between 1861 and 1865. Without question it could do an even better job today.

Moreover, if we take advantage of readily available international assistance, the cost of maintaining such a blockade could be greatly reduced. While German U-boats failed twice at the task, this was only because of the interference of the Wilson and Roosevelt administrations, which for some reason thought that enabling American exports was a good idea. If the current administration were to make clear its more cooperative attitude, there is little doubt that Vladimir Putin would be happy to send the Russian navy to do the job for us, enforcing an airtight blockade on all U.S. exports, at no charge to the American taxpayer whatsoever.

But why stop there? Zero is an arbitrary number. If less exports are better, why not aim for negative values? Instead of just stopping exports, we could increase our imports, and glut the domestic market even more. Instead of merely keeping natural-gas exports illegal, perhaps the federal government should pass a law requiring natural-gas producers to import an amount of natural gas equal to that which they produce, and sell it on the domestic market alongside their own product. Of course, if they were to do this, they would drive foreign natural-gas prices up while crashing those at home, so such transactions would need to be done at a loss. But what of it? The big natural-gas companies might lose some cash, but the rest of us would get our fuel for next to nothing. In fact, they probably would have to pay us to take it. Furthermore, as noted above, we could readily extend such laws to all sectors of the economy. Then everything would be practically free. Wouldn’t it?

Gee, let’s think about this. Is it possible that by making companies buy expensive goods abroad and sell them for less at home, we would simply drive them out of business? Is it possible that by forcing American producers to sell their goods where they get the smallest return, rather than the largest, we might cause them to cut production? If we prevented Boeing from selling its airliners abroad, would that really drive it to drop its prices at home to make up the volume? Or would it force Boeing to raise prices to cover its fixed costs with a smaller number of sales? If we passed a law requiring New York publishers to sell their books only in Manhattan, would that crash book prices on the island as they flooded their limited home market, or send prices soaring as they were forced to pay for much shorter print runs?

The answers to these questions make evident the absurdity of the export blockaders’ position. Like the producers of crops, airplanes, and books, producers of natural gas provide goods to meet the size of their available market. The larger the market, the more they can produce, and the more revenue they can obtain to cover their fixed costs and invest in future development. This is why, as the world’s population has gone up, nearly all goods have become cheaper and more plentiful, rather than the reverse. This is also why blockading another nation’s exports is generally considered to be a hostile act, rather than a form of economic assistance.

The federal government was created to defend the United States, not to wage war upon it. Our European allies need to be able to buy our fuel, or they will fall to enemy domination. If this is permitted, the United States will find itself in a hopeless geopolitical situation. There is only one way to stop this catastrophe. The Obama administration needs to lift its blockade on American natural-gas exports now.

— Robert Zubrin is president of Pioneer Energy and the author of Energy Victory. The paperback edition of his latest book, Merchants of Despair: Radical Environmentalists, Criminal Pseudo-Scientists, and the Fatal Cult of Antihumanism, was recently published by Encounter Books.


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