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Exporting Unintended Consequences | Commentary

This week, the House Energy and Commerce Committee will explore the effects of America’s energy exports. From shale gas to Western coal, demand for American energy resources is creating a new trade wind for America. Previous hearings on this subject have overlooked another major U.S. trade industry that stands to benefit from more exports: agriculture. One doesn’t naturally put together that agricultural exports and energy resources like coal could go hand-in-hand. But in the upper Northwest, a region that stands to gain substantially from energy exports, nothing could be further from the truth.

Sometimes the “law of unintended consequences” can surprise us with benefits or losses far greater than we’d normally expect. We all know that America’s farmers are the most productive in the world. In 2010, for instance, the U.S. Census Bureau reported agricultural exports valued at almost $34 billion. To put that into context, 20 years earlier total exports exceeded $16.6 billion. Since that time, exports have more than doubled

On another axis, U.S. exports of coal are growing as well. It turns out that while coal utilization is decreasing in the U.S., there is a substantial need for new, reliable, affordable energy in the fast-growing economies of Asia.

Here’s where the “unintended consequences” come into play. The largest cost factor in generating new markets for exporting agricultural goods is shipping. Getting corn or beans from a farmer’s field to Cambodia or Singapore takes a lot of steps via trucks, trains and boats. The more efficient that route can become, the better the deal for both the farmer and the buyer. And ultimately, the faster route benefits the consumer who receives fresher produce and grains much more quickly.

Having a purpose-built port on the Northwest coast would be a major benefit to farmers who need to reach export markets as efficiently as possible. Right now, there are three proposals on the drawing board to expand several ports in Washington and Oregon to load coal onto large carriers for shipment to Asia via railroads.

A recent Washington Farm Bureau study evaluating the upstream benefits of coal exports to other shippers found that existing impact studies had likely overlooked the benefits the projects would have to other industries, such as agriculture. The same tracks that would carry the coal are also filled with trains that transport America’s agricultural products from out west. The same port that would export the coal would be the port that could efficiently handle those agricultural products.

In examining these efficiencies, the study concluded that investments from coal were likely to lower costs to other shippers and make the export of other bulk commodities from the Northwest more competitive.

Right now, ports with the capability to handle agricultural products are limited in the Northwest. With coal exports, new doors are opened for agriculture and new investment will benefit all industries using the affected ports.

This opportunity should be a no-brainer for everyone. However, those opposed to fossil fuels are attempting to slow, and even halt, the authorization process through needless studies and pleas to the White House. Opposition groups are failing to realize that blocking the coal export terminals would negatively impact other industries.

This gets us back to the “law of unintended consequences.” We can’t expand exports without private investment and without increased export capabilities, there is little room for economic development. Recently in Oregon, two projects have fallen through — a proposed terminal in Coos Bay and Kinder Morgan’s project in Port Westward. There originally had been five proposed facilities and given that not all would’ve been economically viable, it’s not surprising these two have pulled out. The real concern lies in the loss of infrastructure investment that would’ve come from the development of these facilities. As we now know, the true benefit is far more than originally thought. We simply cannot let the three remaining facilities left waiting for approval and authorization fail; agriculture exports depend on them to succeed in the coming years.

There are leaders who understand the severity of the situation. Sen. John Barrasso, R-Wyo., recently asked, “How many more times, if confirmed, will this EPA director pull the regulatory lever and allow another mining family to fall through the EPA’s trap door to joblessness, to poverty and to poor health?”

Blocking economic development, whether through burdensome regulations or prolonged environmental reviews, will negatively affect the industry and indirectly affect significantly more businesses.

Oftentimes, people focus on the consequences of a particular action and miss the indirect consequences. Unfortunately, in debate surrounding the coal export terminals, the unintended consequences of blocking economic opportunities are the most severe.

Grace Boatright is the National Grange legislative director.

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