Exports of liquefied U.S. natural gas would be a boon to the country’s economy, its trade balance and its relations with friends and enemies alike, as long as the price is right (and markets will take care of that part), a U.S. House subcommittee was told by a quintet of witnesses on Thursday.
Witnesses testifying before the House Foreign Affairs Committee’s Subcommittee on Terrorism, Nonproliferation and Trade were mostly preaching to the choir, save for perhaps Rep. Brad Sherman (D-CA), who worried aloud about exports’ impact on domestic gas prices and supply available for natural gas vehicles.
But even Sherman allowed that providing secure natural gas supplies to America’s allies and perhaps preventing India from turning to Iran for gas would be potential benefits of allowing U.S. exports. Exports from the United States would also give European gas buyers more leverage when negotiating gas supply contracts with Russia’s Gazprom, witnesses testified.
Testifying were liquefied natural gas (LNG) terminal developer Excelerate Energy CEO Rob Bryngelson; David Montgomery, National Economic Research Associates senior vice president; Michael A. Levi of the Program on Energy Security and Climate Change, Council on Foreign Relations; David Mallino Jr., Laborers International Union of North America legislative director; and Michael Ratner, Congressional Research Service specialist in energy policy.
Of the panel, union representative Mallino was the most likely to oppose exports — on the basis that keeping gas at home would create more jobs. However, the self-described enthusiastic supporter of the Keystone XL oil pipeline said LNG exports should be a go so that the country can realize the “full economic benefits” of the revolution in natural gas.
“We recognize that cheap gas can lead to a resurgence in manufacturing that we haven’t seen,” Mallino said. “We should be able to export gas, but we should be able to keep enough here to bring jobs back…We want to see all sectors of the economy revitalized by this energy boom…We just want to see these jobs come back to the United States.”
Mallino argued that exports would help to create a price for gas that would support its continued domestic production, further ensuring that the benefits of robust supply continue.
Not present at the hearing were any representatives from the chemical industry, segments of which have been among the most vocal opponents of allowing gas exports, The Dow Chemical Co. in particular (see Daily GPI, March 12). The chemicals industry uses gas as a fuel and a feedstock, and Dow has argued that exports would raise gas prices to levels that would drive its business overseas.
Dow has been particularly critical of a study commissioned by the U.S. Department of Energy and authored by Montgomery that is supportive of allowing exports (see Daily GPI, Dec. 7, 2012). On Thursday Montgomery explained.
“With abundant gas, we can supply ourselves and export gas and with limited supplies of gas we can’t do either,” he said. “But even with the largest price increases, U.S. energy-intensive industries will still be getting natural gas for half the cost of their competitors in natural gas-importing industries. That’s because the cost of moving gas from where it’s produced in the United States to where it’s burned in countries like Japan or Korea or China or even Europe just about doubles the U.S. wellhead price.
“I can’t believe that the U.S. chemicals industry, for example, is so inefficient that it can’t survive if these competitors are still paying twice as much for natural gas as it is even after we are exporting natural gas. U.S. energy-intensive industries, no matter what we export of LNG, will still be getting natural gas at perhaps half the cost of competitors that we worry about like China and Europe and Japan.”
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