(Albuquerque) If the Obama Administration approves liquefied natural gas (LNG) exports to non-free trade nations (those that do not have separate trade agreements with the United States), New Mexico could see an immediate increase in economic output of $200 million and the addition of 2,000 jobs according to a new Rio Grande Foundation report.

The issue of whether or not to export a portion of America’s bounty of clean natural gas has generated heated debate pitting some environmentalists and manufacturers who oppose exports against producers and free trade supporters who wish to allow exports.

The Rio Grande Foundation has come down firmly on the side of free trade and those who wish to sell natural gas around the world.

Said Foundation President Paul Gessing, “Philosophically, this view flows directly from our support for free markets, but it also is a product of our desire to strengthen New Mexico’s economy by providing new markets for natural gas produced within our borders.”

To come to its conclusions regarding the jobs and economic input of natural gas exports, the Foundation relied on data available from IHS Global Insight which stated that “exports would create over 100,000 direct, indirect, and economy wide jobs and have an immediate impact resulting in between $3.6 and $5.2 billion in potential revenues.”

According to the US Energy Information Administration, New Mexico produces 5.3 percent of total US natural gas, thus making it likely that New Mexico would experience a similar ratio of economic benefits.

Continued Gessing, “The economic impact numbers outlined above are just a starting point in terms of economic impact, but 2,000 new jobs would be enough to qualify these new jobs as the 5th-largest private employer in New Mexico were they all at one company.”

In addition to New Mexico jobs, benefits of LNG exports include increasing tax revenues, reduced carbon emissions over other energy sources, reduced trade deficits, a display of principled support of free trade, and closer relations with foreign people and governments.

Concluded Gessing, “LNG exports are a true win-win-win policy, President Obama should act now.”

Gessing recently sat down with KNAT TV to discuss the issue of LNG exports. See that interview below:

Rio Grande Foundation president Paul Gessing discusses the potential for Liquefied Natural Gas Exports on Joy in Our Town from Paul Gessing on Vimeo.

Natural gas could revolutionize New Mexico’s economy. The fuel of which New Mexico is among the nation’s leading producers, has seen incredible growth in production with the advent of horizontal fracking and new drilling techniques resulting in a 25 percent increase in US production since just 2007.

The advent of cheap, plentiful natural gas has caused production and drilling to decline temporarily here in New Mexico, but the trend holds great opportunity for our state as well. Why is cheap, plentiful natural gas a good thing?

• It’s relatively green. Compared to coal, natural gas generates less than half of the carbon and a fraction of the sulfur dioxide, nitrogen oxides, and particles such as ash;
• It could drive a rebirth of American industry. Natural gas is a feed-stock in many chemicals and plastics. Having a cheap, plentiful supply here in the US could lead to the re-shoring of manufacturers and thousands of new jobs, a stated goal of the Obama Administration;
• It can be exported for the economic benefit of New Mexicans and the US as a whole. Japan is just one energy-poor nation that is eager to import natural gas from producers in New Mexico as the gas currently available in many overseas markets if four times as expensive as it is here.

See the video of Ebell's presentation from April 5, 2013 below:

Myron Ebell Discusses the economic impact of regulations in the US and New Mexico from Paul Gessing on Vimeo.

Ebell's slides are also available. Ebell's organization is the Competitive Enterprise Institute, a great organization.

See what the legislature is doing relative to energy, utilities and the environment:

Federal overreach and the unending growth of Washington’s power has been a real problem for decades. That may be a trite statement these days with Washington now in firm control of Americans’ health care, but a real-world example from right here in New Mexico should give us all pause.

In 2005 Peter and Frankie Smith purchased 20 acres of property located 19 miles south of Santa Fe, New Mexico. The retired couple found much of the land in desperate need of maintenance, stating that when the property was first purchased, truckloads of garbage and debris littered the area. During the cleaning process, the Smith’s smoothed out a portion of an arroyo in order to safely remove the trash.

(Albuquerque) The Competitive Enterprise Institute and Rio Grande Foundation today released a joint working paper criticizing the Regional Haze settlement agreement recently proposed by the New Mexico Environment Department. The study is the first independent analysis of the settlement, which would resolve an ongoing dispute between the state and the Environmental Protection Agency over the haze-causing emissions from the San Juan Generating Station.

“EPA’s Regional Haze plan would impose almost $375 million in compliance costs on PNM ratepayers, in order to achieve an “improvement” in visibility that is imperceptible,” said CEI policy analyst William Yeatman, who authored the report. “Unfortunately, the state’s alternative proposal is even worse—it would cost almost $20 million more, yet it would significantly diminish PNM’s firm generating capacity. To put it another way, the state’s alternative would cost more, for less.”

At issue is an EPA regulation, known as Regional Haze, which requires that states improve visibility at federal National Parks. In June 2011, New Mexico proposed a Regional Haze plan that required a $36-million retrofit at the San Juan Generating Station. Three months later, in August 2011, the EPA rejected the state’s plan, and imposed a federal plan that required a $375-million retrofit at the power plant—more than ten times the cost of the state’s original plan. During the summer and fall of 2012, the New Mexico Environment Department led negotiations, in an attempt to reach an alternative agreement that would bridge the gap between the state and the EPA on Regional Haze.

In early October, after months of negotiation, the New Mexico Environment Department proposed a settlement agreement, which was then sent to EPA for review. Unfortunately, the Environment Department refused repeated requests for details on the settlement agreement. Despite the lack of specifics, it is nonetheless possible to perform a line-item cost analysis of the proposal, using regulatory filings submitted by PNM and conservative assumptions.

“New Mexico is much better off continuing to fight for its original, affordable Regional Haze proposal in court,” noted Yeatman, referencing litigation launched by the state against the EPA over the Regional Haze regulation in late 2011. The case is pending before the Tenth Circuit Court of Appeals. He continued, “Due to the unique prerogatives accorded to states under the Regional Haze program, New Mexico’s lawsuit has good prospects for success. Even were New Mexico to lose its case, suffering the EPA’s regulation would be better than the settlement negotiated by the New Mexico Environment Department.”

Added Rio Grande Foundation President Paul Gessing, “New Mexico rate payers deserve the best rates possible. While environmental concerns are important as well, the original proposed retrofit is far more sensible and cost-effective than the other two options.”

To read the report, click here."

(Albuquerque) Wind energy, because of its variable nature, is not suited to be the lone or primary source of a grid’s total electricity, according to a new Rio Grande Foundation–Reason Foundation study. If it is used to produce more than 10-to-20 percent of a system’s electricity, wind power increases operating costs due to the need for expensive storage facilities or continuously available CO2-emitting backup power generation facilities.

The new Rio Grande Foundation–Reason Foundation report uses a full year’s worth of hour-by-hour power grid data from PJM Interconnection, which manages the electrical grid in part of the Eastern United States, to simulate how wind would’ve supplied the necessary power to customers in 2009. Reason’s models show wind power would’ve failed to supply all of the electricity PJM customers needed over 50 percent of the time.

Thus, if wind is going to produce a large percentage of a grid’s electricity it will be necessary to build expensive energy storage facilities or reserve power generation facilities to supply power when there is not enough wind to meet energy demands at any given time and to prevent brownouts and blackouts.

The study shows that as more reserve power is needed, the environmental benefits of wind power decrease due to the C02 emissions from those facilities, which rely upon fossil fuels and must operate even when not being used, in order to ensure reliability of the electrical grid.

The study concludes that, given the costs involved, the practical upper limit for wind power’s contribution to the electricity grid is 10% of the total energy mix. This would result in a 9% reduction in CO2 emissions.

Very high wind penetrations are not achievable,” said William Korchinski, author of the study. “As wind’s share increases, system reliability will be adversely affected disproportionately—unless adequate reserve power is available. That power reserve is expensive and lowers any possible environmental benefits.”

Full Study Online

“The Limits of Wind Power” is available online here.

If you haven't noticed, gas prices are on their way down in recent weeks. While the media has taken note, the reasons behind the decrease are not obvious. That is why the upcoming panel discussion being held on May 30 (which Rio Grande Foundation president Paul Gessing will participate in) is so important (details and event invite here). You are encouraged to attend this free event!

At the Rio Grande Foundation, we have always stated clearly that gasoline prices are set largely by the marketplace with several additional factors impacting them. If there were a "vast conspiracy" on behalf of higher gas prices, they would be kept high all the time and would be far higher than they are. Enjoy lunch with us and find out more details not only on our perspective, but what one of the top national experts and several local ones have to say on the issue.

You can bet that gas prices will rise again some day and the conspiracy theorists will be there to blame "big oil" and point fingers (usually at the wrong parties).