Better out than in

ON AMERICA’S Gulf coast, massive industrial facilities stand idle. Miles of twisting stainless-steel pipes and huge storage tanks gleam uselessly in the sun. They are a reminder of the hundreds of billions of dollars that America has invested in terminals for handling imports of liquefied natural gas (LNG). Thanks to the boom in domestic shale gas, those imports are no longer needed. America produces nearly as much gas as it consumes, and will soon produce far more.

So the obvious thing to do with those idle terminals is to re-engineer them to handle exports. Instead of receiving shiploads of liquefied gas and re-gasifying it, they should be taking American gas, liquefying it and loading it onto tankers. Converting these plants will not be cheap—each one will cost at least $5 billion. But the potential rewards are much larger.

In America gas sells for around $3.40 per million British thermal units (mBTU). In Europe it costs around $12. In gas-poor Asia, spot cargoes change hands for as much as $20 per mBTU. Since it costs roughly $5 per mBTU to liquefy the stuff, ship it and turn it back into gas, America could be making a fortune from gas exports. To the extent that such exports displaced dirty coal, they would also help curb global warming.

Most of America’s two dozen LNG import terminals have applied for export licences. Yet only one, Sabine Pass in Louisiana, has actually started retooling its kit. Gas from there will start flowing onto global markets by the end of 2015. Why has every other terminal been so slow to seize this opportunity?

Converting a plant is not easy: firms must build row upon row of expensive fridges, known as “liquefaction trains”, to get gas moving in the opposite direction. But the real hold-up is political. No LNG facility besides Sabine has yet received permission to export. American law requires the Department of Energy to determine whether gas exports are in the public interest, and President Barack Obama’s administration is in no hurry to make up its mind.

The vocal lobby against gas exports unites environmentalists who object to fracking (the process by which gas is extracted from shale by blasting it with water) and many energy-hungry American corporations. They fret that allowing exports will raise gas prices for domestic consumers—like themselves, for instance.

Environmentalists and opportunists

Both groups’ objections are unconvincing. Greens claim that fracking pollutes the air and groundwater, but the evidence suggests that any such pollution is limited. Energy-hungry firms, such as those that operate gas-fired power stations or smelt aluminium, fear that higher domestic gas prices would hobble the revival of American manufacturing. Firms that both guzzle energy and use gas as a feedstock, such as Dow Chemical, are especially worried. But Mr Obama should rebuff them, for two reasons.

The first is moral. Gas-guzzling corporations want to prevent the owners of the gas from selling it to the highest bidder. That is like lobbying the government to force your neighbour to sell you his house at a discount, rather than sell it to somebody else. It is pure rent-seeking, and should be resisted.

The second reason is economic. Gas prices in America are unsustainably low (see article), and will eventually rise a bit whether exports are allowed or not. However, they will remain much lower than elsewhere, because other countries have failed to frack as deftly as America. If Mr Obama prevents companies from exporting American gas, it will be left in the ground. The world will be a dirtier place, and America a poorer one.