Victories are hard won and often seem few and far between on the free market energy and environment front. We spend much of our time, bemoaning and battling bad policies, regulations, laws and court decisions. We take as victories, celebrate and publicize simply defeating (often temporarily) bad policies.
Such victories, temporary or not, while they merit celebration, are simply holding actions. True environmental and energy victories are when free choice and markets expand, bringing increased well-being in the U.S., abroad or both. We won just such a victory on September 29, when the federal government approved the expansion and modification of the Cove Point natural gas liquefaction.
For a number of years natural gas was increasingly in short supply in the United States. We imported natural gas to feed our growing demand for this flexible resource through a number of liquefaction plants along the coasts. However, as high prices encouraged outside the box thinking and technological advancement, the fracking revolution broke loose, natural gas became abundant again and prices fell.
In the past couple of years, the average price of natural gas has been so low that some companies are capping existing wells and others are flaring natural gas associated with oil production because prices are to low to justify producing and storing it. At the same time, our allies in Europe and those facing energy scarcity in the developing world, need new sources of natural gas so they aren’t held hostage to an openly hostile regime in Moscow (Europe), or to their own bad luck geologically speaking (many developing countries).
That’s where Cove Point and other liquefaction plants come in. The U.S. can create jobs here, add to the GDP and government revenues, while also benefiting people and the environment in other parts of the world by exporting our increasingly abundant supply of natural gas. Its a win-win that only environmental extremists can object to0 — and they do!
Environmentalists fought Cove Point on the grounds that it will encourage increased fracking and natural gas use. Remember, these are the same environmentalists who were lauding natural gas a decade ago when gas was expensive and they saw it as transition fuel from coal to renewable electric power systems. Once gas became relatively cheap, and it became clear that rather than a transition fuel, it would become a dominant source of energy and a driver of continued economic growth, environmentalists wanted to put on the brakes. Gas is an enemy of their steady-state, zero-growth world view.
When fully operational in 2017, the $3.8 billion project would adding about 75 jobs to the approximately 100 already at the site. Cove point will also contribute an estimated $40 million a year in additional tax revenue to Calvert County. Upon completion, Cove Point could move enough natural gas daily to meet the household needs of 860,000 homes for four days. Cove Point’s parent company, Dominion, already has buyers lined up for its production, including a Japanese gas utility, a Japanese trading company and the U.S. unit of one of India’s largest gas distributors.
Cove Point is an important victory in the cause of decreasing fuel scarcity but it is just a step. The Obama administration has been exceedingly slow in approving such plants. It is the fourth natural gas export facility to be approved by FERC with 14 more awaiting approval (they have been for sometime). FERC should move with greater urgency to approve the rest of the plants and not hamper them with overly burdensome conditions that would slow or even prevent (by raising the costs too much) them from being built.