The Energy Information Administration, an agency within the Energy Department that monitors the U.S. energy system, is conducting a multi-year study of natural gas prices, including the impact of the U.S. industry, an EIA spokesman said.
The impact of LNG on gas prices has long been a contentious issue, dividing domestic gas buyers and exporters located primarily along the Texas and Louisiana Gulf Coast.
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In a briefing with reporters this week, Paul Cicio, president of the trade group Industrial Energy Consumers of America, which represents the manufacturing and industrial sectors, said the U.S. government has too long ignored the effects of shipping increasing amounts of natural gas abroad.
“Administrations have put in place policies all about exporting without any consideration to the public interest,” he said. “We’re going to see how (the Department of Energy) responds to this. They’re doing a fresh review of this internally right now.”
Last week, U.S. natural gas averaged $4.50 per million British thermal units — 60 percent higher than 12 months ago. And with prices in Europe and Asia at all-time records, there is a fear that more U.S. gas will be shipped overseas, further driving up bills for homes and businesses.
Oil and gas companies have long downplayed the impact of LNG exports on U.S. gas prices, arguing that factors such as weather and the amount of natural gas in storage are far more important in determining prices.
“This has been a pretty well studied issue. We’re now in year six of LNG exports and what we’ve seen so far is pretty consistent, a rise in exports has a fairly small impact on prices,” said Dustin Meyer, a vice president at the American Petroleum Institute. “I don’t see a huge need for another study, but we would never discourage it. I understand. There’s a lot of interest in this subject.”
For U.S. manufacturers competing with log-wage operations abroad, any increase in energy prices 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, arguing, “exports must be limited to surplus supply of natural gas.”
Environmentalists have long pushed back against the development of LNG terminals. When Freeport LNG applied to expand its export license in December, the Sierra Club and Natural Resources Defense Council protested, arguing LNG exports were driving up prices and “harming Americans now.”
“At a minimum, recent trends call into question the continuing validity of the analyses (the Energy Department) has relied upon in approving prior export applications,” they wrote.
At a Senate hearing on natural gas prices in November, Sen. Joe Manchin, D-W.V., chairman of the Senate Energy and Natural Resources Committee, asked energy experts whether LNG was “putting an extra burden on the American consumer.”
Among the experts was Acting EIA Administrator Stephen Nalley, who said, “Prices are higher now than they have been in a long time. Clearly, it’s putting pressure on residents and industry.”
The Biden administration has also come under pressure from some Democrats to ban LNG exports, in a bid to reduce greenhouse gas emissions.
Earlier this month, Deputy Energy Secretary David Turk told members of the House Energy and Commerce Committee the Biden administration was not considering such a ban but added, “we’re looking at the full range of what you all are giving us to look at.”
james.osborne@chron.com
