Obamacare Looks Cheap Compared With This Policy

With the nation focused on the coming cost of Obamacare and the personal expense of avoiding the system, there's another U.S. policy initiative that may ultimately cost Americans much more dearly. The White House recently announced that it favors the promotion of free trade in liquified natural gas, rather than the protectionist attitude adopted by America's Energy Advantage, a lobbying group spearheaded by Dow Chemical (NYSE: DOW  ) and Alcoa (NYSE: AA  ) .

While the policy may benefit energy companies such as Chesapeake (NYSE: CHK  ) and ExxonMobil (NYSE: XOM  ) , it will hurt innovation and the bottom line of retailers such as Wal-Mart that could rely on cheap transportation from liquified natural gas.

In the following video, Fool.com contributor Doug Ehrman discusses the policy, how it compares with the cost of Obamacare, and why it has important investment ramifications.

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  • Report this Comment On May 18, 2013, at 9:11 PM, LazerTown wrote:

    Watch Republicans attack him for this policy now. Even though him doing the opposite would be Crony Capitalism, of which they would attack him for.

    There isn't a shortage of natural gas, and protectionist policies would encourage inefficient usage. You can't have everything, exporting of products helps with the trade deficit, and gives us jobs, with money flow that is coming from outside the country, which is even more beneficial.

  • Report this Comment On May 18, 2013, at 11:54 PM, grampakrapsicher wrote:

    There need to be more places to fill up Natural Gas Powered Vehicles - or they need to be dual fuel - Natural Gas/Gasoline acceptable -in case there are no Liquid Natural Gas filling places available.

    -That is the current flaw when it comes to Liquid Natural Gas use in vehicles. If there were a stock in a company that supplies these facilities, that would be a great one.

  • Report this Comment On May 19, 2013, at 1:58 AM, hroark314 wrote:

    This is a terrible economic analysis. I'm an electricity expert - not a natural gas expert - but I feel very comfortable stating that Mr. Ehrman does not understand this issue. Let's go over a few points.

    First, Exxon and Chesapeake are not large owners of LNG - they're large owners of natural gas. That may not be an important detail with regards to the larger economic arguments, but it demonstrates that Ehrman doesn't understand the issue.

    Second, every single major analysis of this issue - both for and against exports - has indicated that the total impact on GDP will be small. That includes the pro-export NERA report commissioned by DOE and the anti-export study by Wallace Tyner of Purdue. CRA has also come out as anti-export, but they didn't bother to conduct an analysis of the GDP impact.

    Third, it's a basic principle of economics - that goes back hundreds of years to David Ricardo - that free trade benefits everyone. In plain English, allowing free trade in LNG can't hurt US GDP for the very simple reason that, if exporting LNG reduces GDP, then natural gas suppliers won't export LNG because they'll make more money selling it to US consumers.

    Fourth, the price of natural gas will not spike if exports are allowed. There are significant transport costs between the US and Asia (where natural gas is most valuable). Those costs are high enough to insure that any price increase will be relatively mild. Certainly, natural gas prices are not going to rise above the 2007 level for years and years to come and I seem to remember the economy doing okay in 2007.

    Finally, it's far from clear who will benefit and who will lose from natural gas exports. Yes, exporters will gain and, yes, DOW and other chemical companies will lose. However, it's impossible to know the impact on Wal-Mart. That's because while chemicals and others goods for which natural gas is an important feedstock will rise in price, the relative cost of imports will fall (because increased US exports will cause a relative increase in the value of the dollar). That will also put pressure on exports of other goods, making those goods cheaper for Wal-Mart and consumers. In other words, while we know that the net impact of exporting LNG will be positive for the US, it's very difficult to know exactly who will win and who will lose.

    Okay - I realize I've written too much, but this piece is shockingly bad economics. I'm willing to discuss it in person (on video, if you like). So, Mr. Ehrman, if you would like to talk with me further, please contact me and I'll be happy to forward you my CV and business credentials.

  • Report this Comment On May 19, 2013, at 9:09 AM, consAREidiots wrote:

    this site is idiotic.

  • Report this Comment On May 19, 2013, at 9:10 AM, SListon wrote:

    Another Libtard trying to deflect truth from his own fantasy. Gee, can I find something that might look as though it costs more than the ever unpopular Obamacare. These clowns think the total populace are lemmings. Take a hike, loser.

  • Report this Comment On May 19, 2013, at 10:09 AM, AnnyFM wrote:

    Here in Upstate New York we are engaged in informing ourselves about the pros and cons of shale gas on what is essentially farm, vineyard, and tourist country. Here is an discussion from January 2012 on the long term negative economic effect of gas drilling. New York is the site of Love Canal, so we remember the cost of ignoring the long term effects for a short term gain.

    http://energypolicyforum.org/portfolio/shale-promises-or-sha...

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