Are LNG exports driving up natural gas prices for U.S. consumers and businesses?


The Energy Information Administration, an agency of the Department of Energy that oversees the U.S. energy system, is conducting a multi-year study of natural gas prices, including the impact of U.S. industry, a spokesperson said. the EIA.

The impact of LNG on gas prices has long been a contentious issue, dividing domestic gas buyers and exporters located primarily along the Gulf Coast of Texas and Louisiana.

In a briefing with reporters this week, Paul Cicio, president of the Industrial Energy Consumers of America trade group, which represents manufacturing and industry, said the US government had ignored the effects of shipping quantities for too long. growing quantities of natural gas abroad.

“Governments have put in place policies that are entirely export-oriented without any consideration for the public interest,” he said. “We will see how (the Ministry of Energy) reacts to this. They are doing a further review of this internally right now.

Last week, US natural gas averaged $4.50 per million British thermal units, 60% higher than 12 months ago. And with record prices in Europe and Asia, there are fears that more US gas will be shipped overseas, further driving up bills for homes and businesses.

Oil and gas companies have long played down the impact of LNG exports on U.S. gas prices, arguing that factors like weather and the amount of natural gas stored are much more important in determining prices.

“It’s a pretty well researched question. We are now in the sixth year of LNG exports and what we have seen so far is fairly consistent, an increase in exports has a fairly small impact on prices,” said Dustin Meyer, vice president of the American Petroleum Institute. “I don’t see a huge need for another study, but we would never discourage it. I understand. There is a lot of interest in this topic. »

For U.S. manufacturers competing with daily-pay operations overseas, any energy price increases can ripple through the entire domestic supply chain, Cicio said.

In November, he wrote a letter to Energy Secretary Jennifer Granholm asking the administration to create a “safety valve” that would limit LNG shipments when domestic gas prices rise, saying “the exports must be limited to excess supply of natural gas”.

Environmentalists have long rejected the development of LNG terminals. When Freeport LNG applied to extend its export license in December, the Sierra Club and the Natural Resources Defense Council protested, arguing that LNG exports were driving up prices and “now hurting Americans.”

“At a minimum, recent trends call into question the continued validity of the analyzes (the Department of Energy) relied upon to approve past export applications,” they wrote.

During a Senate hearing on natural gas prices in November, Sen. Joe Manchin, DW.V., chairman of the Senate Energy and Natural Resources Committee, asked energy experts whether LNG ” imposed an additional burden on the American consumer”.

Among the experts was EIA Acting Administrator Stephen Nalley, who said: “Prices are higher now than they have been for a long time. Obviously, this puts pressure on residents and industry.

The Biden administration has also come under pressure from some Democrats to ban LNG exports, in an effort to reduce greenhouse gas emissions.

Earlier this month, Deputy Energy Secretary David Turk told members of the House Energy and Commerce Committee that the Biden administration was not considering such a ban, but did added: “We are looking at the full range of what you all give us to look at. ”

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