ICYMI: Guest column: When it comes to banks and fossil fuels, let the free market work

The Advocate
By: John Wittman

With the Trump administration promising to slash onerous government regulations that have hamstrung America’s energy sector, Louisiana stands to be a major player in strengthening America’s energy dominance, particularly when it comes to exporting liquefied natural gas.

The benefits are twofold: Unleashing the power of American energy to grow our economy and create jobs while enhancing our national security posture by providing a reliable, low cost energy supply to our foreign allies.

At the federal level, the incoming administration is expected to cut regulations that have hindered LNG exports while reversing executive actions that have harmed Louisiana’s economic vitality, such as the politically driven decision to pause approvals for pending and future applications to export LNG while increasing scrutiny of proposed projects by the Department of Energy. 

The misguided LNG export ban — which was immediately rescinded shortly after President Donald Trump took the oath of office this week — has led to significant and costly delays for critical energy projects and investments in Louisiana and across the U.S. Gulf Coast.

For example, Energy Transfer, a provider of LNG and pipeline operator, has had its $13 billion LNG export facility in Lake Charles on hold due to the export ban. Another company, Commonwealth LNG, an export LNG terminal provider, has had its $10 billion facility near Cameron on hold for more than 18 months as it waits for an LNG export permit.

Louisiana — and the U.S. — should not follow the path taken by the Biden administration on the LNG pause by interfering in the free markets for politically-motivated purposes.

While anti-free market interest groups push the world’s largest banks to “quit” fossil fuels, capital continued to flow to projects that made financial sense. For example, the world’s largest financial institutions have financed nearly $7 trillion in oil and gas projects since 2016, with more than $700 billion in loans and underwriting last year alone.

Yet, many of these same banks have simultaneously become ensnared by state-level “fair access” laws as lawmakers sought to counter the political pressure of anti-free market interest groups. These “fair access” laws essentially prohibit banks alleged to be boycotting the oil and gas industry from doing business in states where the laws have taken effect.

Even Orwell would blush at the accusation that banks are boycotting fossil fuels despite providing $700 billion in lending and underwriting to the very same industry since 2016.

When the government intervenes and limits which financial institutions can conduct business with the state based on political perceptions, competition suffers and taxpayers and the economy lose. Conversely, when governments encourage competition in the financial sector, companies and public entities alike will get better returns on each dollar invested — including on all the billions of dollars worth of infrastructure that will facilitate new and expanded energy exports in states like Louisiana.

Whether through “fair access” legislation or other laws that restrict how banks can operate in a particular state, now is not the time to play politics with financial services.

Lawmakers should allow the free market to work, both by unshackling LNG export projects and by allowing financial institutions to compete in financing the critical infrastructure to support them.