Free Trade In Liquified Natural Gas Benefits the Creators

A recent news article illustrates the sort of unprincipled, short-range thinking that can occur in our society, especially when it comes to issues of free trade.  (“US Gas Exports Clear Hurdle” by Keith Johnson and Tennille Tracy, The Wall Street Journal, December 6, 2012,  The article discusses a government study that endorsed allowing the free export of liquefied natural gas from the United States, which is currently restricted.  While the study makes the right conclusion, it appears to do so without citing the best reason for doing so.
For those who haven’t been following this issue, North America is currently projected to become a net exporter of natural gas and oil as a result of the creation of new technologies that allow for obtaining these resources from areas that were outside the reach of conventional oil and gas drilling techniques.  These new technologies involve directional drilling and hydraulic fracturing (i.e., “fracking”).  (“The U.S. Natural-Gas Boom Will Transform the World”, by by John Deutch, The Wall Street Journal, August 14, 2012,
The article describes the government study as concluding that the benefits to natural gas exporting companies, businesses, and workers would outweigh the losses from domestic companies, consumers and businesses that use natural gas.  This later group of domestic natural gas consumers is viewed as “loosing” some from exporting natural gas, since the price of natural gas will rise due to increased demand from abroad.
However, the first article never mentions whether any consideration was given to the people who invented these new oil and gas drilling technologies.  What will be the result if they are not allowed to gain maximum economic benefit from the invention of these new drilling techniques?  It is true that the price of natural gas in the US market probably will rise slightly from its current record low levels if the export of liquefied natural gas occurs.  But, this increased price will mean increased profits for the oil and gas companies that are implementing these new drilling technologies, which will mean that the people who created these new technologies will benefit.  They will be given an increased economic incentive to create new technologies in the future, which will further increase the standard of living of everyone.  Furthermore, other young scientists, engineers, and businesspeople will know that they will also materially benefit from any new technologies that they invent and bring to market, which will create the incentive for the development of new technologies in the future.  Ultimately it is new technology that increases standards of living, and we must ensure that the people who create new methods of production have every incentive to invent.  Considering the benefits to the people who created the new energy is a much more principled justification for free trade in natural gas, but it is overlooked by those who don’t seem to understand that the free human mind is the root of all production.

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I am Dean Cook. I currently live in Dallas Texas.