The debate over the export of LNG revolves around concerns about future scarcity and the potential benefits of keeping American natural gas for domestic use. Some argue that banning exports would lower domestic prices but would primarily affect the oil industry and its shareholders and workers. This policy has minimal political downside for liberals, as oil workers are a relatively small constituency. However, concerns about accelerating domestic resource usage are not new, dating back to post-World War II when the U.S. restricted oil imports to protect the domestic industry and ensure security of domestic supplies.
In the past, there was a fear of future scarcity, with some believing that producing oil now would mean less for future generations. However, this fear has not materialized as many Middle Eastern countries actually have more reserves now than decades ago. The idea of sacrificing resources for the benefit of foreign, potentially unfriendly regimes has been used to criticize exporting nations, such as Iran under the Shah. Additionally, concerns about the Dutch Disease, where a surge in oil exports could damage economies by strengthening currencies, have been raised.
Historically, conserving resources during price booms has not proven to be economically beneficial in the long term. Withholding supplies during a price boom may increase prices temporarily, but selling resources then and investing in other avenues could yield significantly higher profits. The notion of ‘keeping it in the ground’ raises arguments around absorptive capacity and potential benefits from improved welfare, health, and education. Countries like Norway and Kuwait have created sovereign wealth funds from excess oil income, which have proved to be more financially beneficial in the long run.
Environmentalists opposing the development of increased LNG export capacity may have concerns about how government funds are utilized, with some fearing the potential negative impact of sudden surges in income. However, it is argued that better governance is the solution to these concerns, rather than leaving resources in the ground. While cases like Muammar Qaddafi’s Libya show that conservation of resources may not always lead to optimal outcomes, the potential benefits of utilizing natural resources for economic and social development cannot be overlooked. Ultimately, finding a balance between resource conservation and sustainable economic development is essential for future generations.