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American energy experiencing a bright new day

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Margo Thorning Margo Thorning
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Margo Thorning is senior vice president and chief economist with the American Council for Capital Formation and director of research for its public policy think tank.

America faces new energy opportunities based on the emergence of abundant resources. Once largely dependent on foreign producers, the abundance of newly tapped domestic shale oil and gas has positioned the country as a world energy leader. The United States has the resources now to fuel manufacturing and business at home while helping fulfill global demand, and West Virginians have the potential to benefit greatly from the insatiable global market.


In its latest biennial report, the Potential Gas Committee, a group of natural gas exploration, production and transportation experts, estimates the U.S. has the highest levels of recoverable fossil fuels in the organization’s 48-year history. West Virginia is now within the top 10 producers of natural gas in the U.S. producing about 539.9 trillion cubic feet of gas in 2013. These numbers add to the mounting case for expediting permits for liquefied natural gas (LNG) exports, creating more living wage jobs, instead of allowing the exporting process to languish inside the Department of Energy.

Last year America surpassed Russia as the world’s largest natural gas producer, yet one might not guess it from current trade policy. Technological and infrastructure developments spurred a 33 percent increase in natural gas production between 2005 and 2012, according to the latest forecast by the Annual Energy Outlook. Moreover, the report predicts production to increase by more than 55 percent by 2040.

Natural gas production growth is so impressive it will continue to outpace growing demand. Electricity generation and industrial requirements are expected drive up domestic demand by about 0.8 percent yearly through 2040. Annual production by contrast is anticipated to double that. In the absence of international demand it is easy to see that mismatch will create a surplus of gas here at home.

It’s time for policy in Washington to catch up with developments in the field. Policymakers should act now. America’s production does not operate in a vacuum, and the window to capitalize on our energy advantage is closing. This is where members of West Virginia’s congressional delegation, like Sens. Joe Manchin and Jay Rockefeller, and Reps. Nick Rahall, Shelley Moore Capito and David McKinley, have a lot of sway. Through bipartisan legislation such as H.R.6, The Domestic Prosperity and Global Freedom Act, soon to be considered by the U.S. Congress, our policymakers can carve out access for U.S. resources in the international market and secure our competitive ability to garner domestic income from exporting our abundant resources.

Several developing countries share similar energy reserves and are quickly mobilizing their capabilities. According to the Energy Information Administration, over 40 other nations are developing more than 130 shale formations. One only needs to look at recent Russian aggression to see how influential those assets are becoming on the global stage. Sadly, many of these gas rich regions don’t see eye-to-eye with U.S. foreign policy.

If pending legislation to speed up exports of our natural gas is approved in Congress — such as H.R.6 and companion legislation in the Senate — we will see our deficit reduced and our economy strengthened by the addition of tens of thousands of new jobs. If H.R.6 isn’t passed, those jobs and national income will be torn from our fingertips.

Shale development is already revitalizing the American economy and resuscitating entire regions of the country. Natural gas supports an estimated 1.7 million jobs directly and indirectly, touching nearly every sector. It is bolstering U.S. competitiveness, particularly in manufacturing. A study by the Boston Consulting Group found that about half of major manufacturers have or are considering reshoring operations to the States. The move in turn is creating jobs and driving demand for skilled workers.

More and more, the chorus in Washington is becoming attuned to the shifting energy current. Lawmakers in Congress from both sides of the aisle have pushed for greater energy exports, and both the House and Senate have introduced legislation to circumvent the executive branch’s slow-walk. But leadership on the issue should come from the White House. Nothing will send a stronger signal to the world of America’s resolve than executive action from the country’s highest office.

America has stepped into an era of energy abundance. It’s time our policymakers in Washington act to secure the future of our safe and reliable natural gas resources by quickly approving H.R.6 and working together to move similar legislation through the Senate.