The Obama Administration's economic vision for America is coming into focus and it's not pretty -- the United States as a third-world nation.
Third world economies export raw materials, such as oil, timber and ore, while advanced economies process raw materials into value-added manufactured goods.
The U.S. has a newfound abundance of natural gas from the fracking boom. While the debate over fracking continues, the question remains: Should we use the gas for value-added manufacturing here in the U.S. (both as an inexpensive energy source and as a feedstock for chemicals and pharmaceuticals), or do we export it in raw form as liquefied natural gas?
The development strategy the president seems to favor resembles that of an extractive third world economy. The Financial Times reports:
"The Obama administration has signalled support for more plants to export liquefied natural gas, as the US embraces its surging energy production as a key new element of its national security policy.
Barack Obama said at the weekend the US was likely to be a net gas exporter by 2020, the strongest sign yet that the president is swinging his support behind higher energy sales overseas."
European and Asian customers currently pay three to four times the going rate for natural gas in the U.S. Under the White House plan, we would frack as much gas as we possibly can and send it to Japan to fuel their manufacturing industries. The gas would return to our shores in the form of value-added manufactured goods.
American manufacturers, including Dow and Alcoa, disagree. They advocate limiting gas exports, instead using the gas as a source of cheap energy to give U.S. industry a competitive edge over Asian competitors. They argue rightly that manufacturing creates more jobs outside its sector than any other industry.
But the oil & gas industry supports maximum exports, and it has an ally in the debt merchants of Wall Street. (Gas liquefaction plants typically have a 4-to-1 debt-to-equity ratio.)
It's no surprise an administration as tied to Wall Street as this one is taking the side of the financial sector.
But it's even worse: If the administration has its way, neither Congress nor any government official, elected or appointed, would have any say in the matter.
The Obama Administration (along with corporatist allies in the GOP) is pursuing the TransPacific Partnership (TPP), a so-called free trade agreement with eleven nations including Japan. TPP has been described as NAFTA on steroids, and the president says he wants to conclude it this year.
If TPP is approved we would be required to export natural gas to Japan.
Under the banner of global free trade, Congress would forfeit its power to craft a national energy policy that serves the best interests of all our citizens, rather than the narrow interests of international bankers and the Seven Sisters.
I would argue that a maximum export policy relegates the U.S. to the status of a captive colonial market for manufactured goods from Asia.
Reasonable people can disagree. But one thing is certain: The decision whether to export and how much to export should be made in America, by Americans, not by unaccountable transnational authorities beyond the reach of our elected representatives.
The first order of business is stopping the TransPacific Partnership so we will continue to have control over our nation's energy resources and the power to determine what we do with them.