April 22, 2014

LNG exports would hurt manufacturing job growth

Natural gas industry wants to send gas to Ukraine and drive up U.S. prices.

The Ukraine-Russia crisis has Congress rushing to consider legislation to accelerate exports of natural gas, which will increase U.S. natural gas and electricity prices.

This is despite the U.S. not having any LNG export terminals ready to ship until 2015 and Ukraine not having an import facility.

The justification for such drastic and reckless action does not add up. So what is driving congressional action that could threaten manufacturing jobs?

Even though the U.S. Department of Energy has already approved shipments of LNG (liquefied natural gas) equal to those of Qatar, the largest LNG exporter in the world, Congress is pushing ahead to export volumes more than three times that size.

On April 9, the U.S. House Subcommittee on Energy and Power voted on H.R. 6, the “Domestic Prosperity and Global Freedom Act,” a bill that would approve all LNG export applications. H.R. 6 passed by a vote of 15 to 11. Almost identical legislation has been introduced in the Senate.

The real reason is that the oil and gas industry is pushing Congress to accelerate exports so they can increase natural gas prices here. Two DOE reports confirm that LNG exports result in increased domestic natural gas prices.

This is exactly what happened in Australia, which has been exporting LNG for more than a decade. Now, natural gas prices have tripled; manufacturing companies are being asked to pay the higher LNG export price and are closing their doors.

On March 27, ABC news reported that families are going without food and medicine to pay their energy bills. The report said, “The irony is that Australia is producing more gas than ever, and is on track to become the world’s largest exporter of gas, with contracts to supply fuel-starved Asian markets prepared to pay triple the prices Australians do for energy.”

The U.S. should aid our Ukrainian and NATO allies by helping them drill for natural gas.

The U.S. Energy Information Administration says Ukraine has 39 trillion cubic feet (Tcf) of proved natural gas reserves. At a 2012 consumption rate of 1.8 Tcf, they have a 21-year supply.

The U.S. has proven reserves of 318 Tcf, a 12-year supply at the 2013 consumption rate of 26 Tcf.

The problem is that Ukraine only produces 1 Tcf of gas.

The old adage of “give a person a fish and feed him for a day or teach him to fish and feed him for a lifetime” still applies. Drilling in Ukraine would create needed jobs, economic growth and energy independence.

Exporting U.S. natural gas simply makes them dependent upon us rather than Russia.

This logic seems completely lost on some in Congress who are determined to change existing law in order to accelerate exports of natural gas.

Congress should not accelerate LNG exports and risk higher energy costs for homeowners, farmers and manufacturers.

Paul N. Cicio is president of Industrial Energy Consumers of America, a national trade association of manufacturers.

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