Imagine somebody offered you a deal. First, you have to agree to take a pay cut at your job. Second, you have to agree to pay more for basic necessities such as food and electricity. Third, you have to breathe dirtier air and live next to a dirtier Chesapeake Bay. And what do you get in exchange for all this pain? You get to watch a handful of companies that are already doing extremely well make a lot more money. Would you take that deal?
When it comes to exporting U.S. natural gas from a drilling process called fracking, that's the tradeoff for the public.
Virginia-based Dominion Resources wants to export liquefied natural gas (LNG) through the Chesapeake Bay via a facility at Cove Point in southern Maryland. This project would not only damage our state's environment, it is also part of an unwise potential national shift toward exporting natural gas, which threatens the economy and jeopardizes our country's goal of reducing harmful greenhouse gas pollution.
The U.S. Department of Energy (DOE) confirmed these negative economic consequences in a key report commissioned last year to study the net economic impacts of exporting natural gas from the U.S. The results were higher domestic energy prices, lower economic output from most sectors and a decline in U.S. wages. In fact, they found that only one industry would be spared from all this economic pain — the natural gas industry. Nearly all the benefits of LNG exports would be concentrated toward a few economic actors within the gas industry and its attendant supply chain while everyone else essentially loses.
This economic pain, felt primarily through rising domestic gas prices, would be particularly acute in industries with high energy expenses or very thin profit margins like agriculture and manufacturing, according to the DOE's report. Low energy prices have fueled a surge of American manufacturing, helping to create about 530,000 manufacturing jobs since 2010. LNG exports, however, would not only increase domestic operating costs, but would also lower energy costs for foreign competitors. A business coalition of manufacturers — America's Energy Advantage — recently confirmed that LNG exports would "erode our country's competitive advantage, threatening to stall the great manufacturing resurgence that is just beginning to bring significant benefits to the U.S. economy."
If you work for the natural-gas industry, own a business involved directly or indirectly with natural-gas production or exports, or own gas reserves, the higher prices that would come from LNG exports would mean higher profits. But as the U.S. economy slowly recovers from the worst economic downturn since the Great Depression, do we really need to increase energy costs to enrich an industry that made $69.3 billion in sales last year?
The DOE data shows that households that rely on income from wages and government transfers — i.e., low and middle income families — will be particularly hard hit. That is because expanding LNG exports "raises energy costs and, in the process, depresses both real wages and the return on capital in all other industries" outside the natural gas supply chain.
Exporting LNG is also an environmental disaster. The proposed Cove Point facility would draw a surge of 90 additional 1,000-foot-long tankers into the Chesapeake Bay each year. In addition to carrying volatile, potentially explosive liquid fuel, these tankers would worsen local air quality and dump billions of gallons of dirty ballast wastewater into the nearby Atlantic waters and fragile bay each year.
The facility also plans to emit more global-warming pollution than all but three of Maryland's seven coal-fired power plants. What's more, once the full life cycle emissions of fracking, piping, liquefying, tanker transport, and end-use combustion are accounted for, it becomes clear that Cove Point would trigger more greenhouse-gas emissions each year than all of Maryland's coal plants combined.
The gas industry is painting as rosy a picture as possible, but we shouldn't believe the hype. Sadly, the DOE, which concerns itself with the basic welfare of the energy sector, seems to be doing just that. After looking at the evidence, the DOE made the unfortunate conclusion that the potential profits awaiting the gas industry if the U.S. shifted toward exporting natural gas would be sufficiently large enough to outweigh all the negatives that most other Americans would experience.
As the debate about whether or not to build Cove Point unfolds, Marylanders should weigh the gas industry's predictions against the facts. Surely, reasonable people can agree that it's not a good idea to benefit one fantastically wealthy industry while threatening the livelihoods of millions of working Americans, hundreds of industries and the health of the environment in which we all live and work.
This is not a deal worth taking.
James McGarry is the chief policy analyst at the Chesapeake Climate Action Network. His email is email@example.com.
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