In the News

Manufacturing and Natural Gas Exports: We Can Do Both

One of the most vital components of the U.S. economy is the manufacturing sector. The label “Made in the USA” is one in which millions of Americans take great pride.  Importantly, U.S. manufacturing companies generate enormous economic growth for the country throughout the value chain.

That’s why a recent headline from American Public Media was particularly notable: “As Caterpillar’s earnings go, so go U.S. exports.” Caterpillar, of course, is a major U.S. manufacturer based in Peoria, Illinois, which leads the world in making a variety of engines, construction and mining equipment, and other machinery. As an important source of U.S. jobs and American-made products that can be sold to other markets, Caterpillar understands the value of free trade and the economic harm that can come from export restrictions.

In that sense, it is perhaps unsurprising that Caterpillar recently wrote to the U.S. Department of Energy (DOE) urging it to reject limitations on liquefied natural gas (LNG) exports. From that letter:

“Some argue that by restricting exports, America would gain a competitive advantage over our international competitors by depressing U.S. natural gas prices while pushing LNG prices higher in other countries. We don’t agree.

“We believe LNG export restrictions would discourage U.S. energy exploration and economic growth. And the notion of restricting exports would be counterproductive to our ongoing efforts to keep other countries from embracing similar policies. The U.S. has – and should continue – to strenuously oppose export restrictions imposed by other countries as they seek to gain advantage over U.S. manufacturers and farmers by restricting products like rare earth materials, scrape steel, and food.”

This line of reasoning is why other major manufacturers – including General Electric, the fifth largest U.S. manufacturer by revenue – have been so vocal in supporting LNG exports and, equally important, opposing harmful trade restrictions. In fact, even the National Association of Manufacturers (NAM) has stressed that export restrictions, including specifically for LNG, would “have far-reaching negative effects on the United States and should be rejected.” In a recent letter to DOE, NAM reinforced that position by saying it “opposes bans or similar market-distorting barriers to exports of LNG or any other commodity.”

Nonetheless, a small group of companies suggests LNG exports would be bad for U.S. manufacturing. However, it’s worth pointing out that their claims have been thoroughly debunked.

The United States is blessed with an abundance of natural gas, enough to meet growing domestic demand and allow for exports. LNG exports will be a net positive for the U.S. economy, including America’s manufacturing sector.