Let’s Put An Export Tariff On Natural Gas

Natural Gas

Natural Gas

Jim Cramer is continuing to bang the natural gas drum — I would link here, but the blog entry is on the premium side of “TheStreet.com”. Sorry.

In a nutshell, though, Cramer talks about how South America is becoming a net importer of natural gas and how it’s making sense for places like Argentina to look to the United States for its vast reserves of cheap natural gas to fuel their vehicles. And this could potentially put the U.S. in the almost absurd position of importing expensive oil to fuel our cars and exporting cheap natural gas to fuel other nations’ cars.

Not only will foreign countries be sucking our hard-earned (and now hard-borrowed …) cash as they have for decades, but they will also be sucking away our valuable natural resources, cheaply.

Am I the only one who sees this as a losing proposition for American citizens? In the long-run, this can only leave the U.S. as an impoverished gas-less phantom state. We’re on the losing end of an essentially mercantile relationship.

We need an export tariff on natural gas.

If places like Argentina really start beating on our (the United States’) door for our cheap natural gas, I think the wise thing to do would be to slap an export tariff on it.

There are several reasons for this.

First, the export of no-value add raw materials like natural gas without encouraging local productive value-add and consumption first is how you end up on the losing side of a mercantile relationship. Think about the relationship the colonies had with Great Britain — they exported cotton and wool to the mother country cheaply and were forced to import clothing at expense.

Second, the United States needs the money in order to create the regulatory structure that should keep natural gas extraction safe, and fix things should they go wrong. If we cannot place the cost of such preventative measures squarely on foreigners who want us to risk our quality of life, environment etc, to supply them with cheap natural gas, who would get to shoulder such burdens? The American taxpayer?

And third, not only can we use the proceeds from export tariffs on natural gas to build our own natural gas infrastructure and ultimately also a green tech infrastructure, the relative cheapness of local natural gas without any sort of tax versus the expense of imported energy would work its market magic to hasten our conversion from oil to natural gas. By putting an export tariff on natural gas, we can show that we put American citizens first and will not cheaply sell our natural resources.

Our great natural gas resources present an opportunity to set things right, but only if we use it strategically. Let’s not mess it up this time.

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