US Natural Gas Exports: Bad Idea?
Let’s pick up where we left off…
As you may remember, we recently discussed the upcoming start of US natural gas exports. In case you missed that article, you can read it here.
Not surprisingly, there’s plenty of controversy surrounding this issue. The oil and gas industry is a big supporter of exporting while environmentalists and various US industries are opposed.
Who’s right?
Let’s look at both sides of this hotly debated topic.
So, how will exporting natural gas benefit the US?
According to proponents, exporting natural gas will strengthen the US economy.
The practice will not only create jobs, but help alleviate the US trade deficit. What’s more, supporters proclaim exports will advance the adoption of cleaner burning fuels around the world.
And that’s not all…
Supporters also argue that exports will provide much needed energy supply to our allies. Case in point, Japan and South Korea are in desperate need of energy. These countries currently pay around 300% more for natural gas than US consumers.
Of course, the explosive situation in the Ukraine helps prove supporters’ point. Russia’s state owned gas company, Gazprom, essentially holds eastern European nations hostage with energy. If the US could export natural gas to Europe, Russia would finally have a major competitor for that market.
Apparently the US Department of Energy (DOE) agrees with supporters…
That’s why the government agency has approved 7 liquefied natural gas (LNG) permits. One of those is previously mentioned Cheneire Energy’s Sabine Pass facility. Another is the Freeport LNG terminal on Quintana Island, Texas.
And there are 23 more permits waiting for approval.
While proponents of exporting have a few valid points, exporting natural gas will likely come back to bite the US in the long run…
In my opinion, US natural gas exports are the exact opposite of what the US needs right now.
And apparently, many of you agree.
Here’s what loyal reader Robert C. has to say…
“If the pipe from Russia or Ukraine gets blocked, folks will be screaming for our supplies. We should always take a position of “Our back-up requirements come first”. No one in politics or statesmanship has friends abroad, so forget about that…”
He went on to say…
“ …We have a dangerous clown in DC right now, who in a misplaced gesture of generosity may try to open the spigot without imposing limitations and controls. That’s the danger I fear most. Based on the last 6 years, not without grounds.”
Thanks for writing in Robert. You make a great point about the US’ back-up requirements coming first. The funny thing is, the US doesn’t even know what our requirements truly are. After all, we’re still importing a vast quantity of natural gas from our neighbors!
To me, it’s only common sense to wean ourselves of foreign natural gas supply before we export ours to other nations. But then again, Washington doesn’t operate on common sense.
As you may have guessed, this article is just the start of our rebuttal…
In future issues, I’ll counter export proponents’ points one by one. Once again, if you have an opinion on this matter, feel free to write in. Our address is CustomerService@CommodityTradingResearch.com.
Be sure to tune in next time!
Until Next Time,
Justin Bennett
Category: Commodities
