Menu

Politics

POLITICS

Plan for U.S. natural gas exports brings talk of economic boon, fears of failure

 

Not long ago, the U.S. was facing the prospect of spending billions to import pricey natural gas from overseas to heat our homes, fuel electrical generation and run our city buses.  The industry was furiously building terminals to handle what was sure to be enormous ship traffic from places like Qatar and the United Arab Emirates.

Now -- as a result of the ‘fracking’ revolution -- the federal government is considering 15 applications to build huge facilities to liquefy natural gas from U.S. shale deposits and send it overseas.

The ability to tap natural gas from unconventional sources has quickly made the U.S. one of the world’s leading producers. But success has a downside. The price of gas domestically is near historic lows. In some places, companies are pulling back exploration because it just doesn’t pay. 

That’s why the industry is anxious to open up the export market;  in particular, countries that don’t have free trade agreements with the U.S.  In many of them, the price is 3-5 times what we are now paying at home. 

“What’s good for the goose is good for the gander.”

- Jack Gerard, president and CEO of the American Petroleum Institute

The battle over exports has created some interesting bedfellows.

The Obama White House is on the same page as the oil and gas industry after a study commissioned by the Energy Department found exporting gas would be a boon for the economy.

The industry couldn’t be happier about the findings. Bill Cooper, of the Center for Liquefied Natural Gas, told Fox News, “What we’re talking about is selling a valuable resource that we have in abundance that we can provide to other countries at a cost that brings valuable investments back into the United States – money into the United States that grows our economy.”

At the same time, an unusual alliance has emerged in opposition to exports. It includes Democratic Sen. Ron Wyden,  Rep. Ed Markey (D-Mass.), the Sierra Club and Dow Chemical, which uses huge amounts of natural gas as feedstock and fuel for its factories.

The environmental arguments are what you would expect – that exports would increase the amount of fracking and production of greenhouse gases.  But Wyden, Markey and Dow agree on a different point: Exports would raise the price of natural gas domestically, potentially hurting the U.S. economy and jeopardizing jobs.

Andrew Liveris, Dow’s CEO, argues the DOE report is flawed because it didn’t take into account the increased use of natural gas by industry in the U.S.

In a statement, Liveris said, “The report offers the baffling conclusion that the U.S. would be better off using its domestic natural gas advantage to fuel growth and jobs in other regions versus strengthening the U.S. economy through manufacturing and benefitting consumers with lower energy costs.”

Part of the sales pitch on fracking is that the U.S. could experience a renaissance in manufacturing fueled by cheap energy costs.  Some industries who bought into the hype now feel like the oil and gas sector wants to pull the rug out from underneath them.

Gas producers insist any price rise would be minimal, adding how is it fair for Dow to protect its right to export its products, while limiting oil and gas from selling there abroad?

“What’s good for the goose is good for the gander,” says Jack Gerard, president and CEO of the American Petroleum Institute.  “If the chemical industry wants the free market to work, so they can produce product and export it, we should apply the same standard to the natural gas and oil industry.”

The current domestic price of natural gas is about $3.40 per million British Thermal Unit (MMBTU).  According to the DOE report, exports could raise that cost by as much as $1.11 over the next five years. 

The gas industry, currently suffering from too much of a good thing, sees dollar signs in the lucrative export market.  Domestic manufacturers, like Dow, argue there is much more value to the economy from exporting finished goods than from shipping an important natural resource overseas.

So far, only one export terminal has been approved. Cheniere Energy is expanding an existing import terminal at Sabine Pass, La., to include a plant to liquefy natural gas for export.

FOX NEWS FIRST NEWSLETTER

Daily must-read stories from the biggest name in politics

Subscribe Get the full text emailed to you daily