America’s new favorite fuel, liquefied natural gas or LNG, is causing a rift between gas producers and manufacturers. The question is, what to do with the shale gas surplus that US gas producers now have at their disposal? Once extracted, natural gas producers have the option of selling the fuel here in the US, or exporting it to Asia and Europe where LNG fetches much higher prices. US manufacturers have formed a coalition, America’s Energy Advantage, with the purpose of promoting energy policies that benefit American manufacturing and its ability to create jobs and bolster the economy.
Many government officials, however, from federal, state and even city levels, are urging Energy Secretary Steven Chu to quickly approve pending LNG export applications. Governments, especially those in states rich with natural gas, strongly believe natural gas exports will benefit national, state and local economies due to construction of LNG processing plants and resulting job growth. From the government perspective, LNG exports will help prevent an “oversupply” of natural gas that could otherwise be sold internationally to profit LNG producers and support job growth in the industry.
Both the manufacturing and government sectors voice a vested interest in economic growth, specifically in terms of job creation, but their means of achieving this are directly at odds with one another. Balanced LNG production will aid in the nation’s goal of energy independence if kept in the US, but large scale production for export could supply more jobs and lower the unemployment rate. The problem exportation presents for the industrial sector is that the price of LNG will be far higher than if it were distributed domestically only, and that difference in cost can mean a big difference in business for manufacturers.
It all comes down to Capitalism, and whether or not the free market shall be allowed to dictate our energy policy. Senator Jim Inhofe (R-OK) wrote in a letter to Energy Secretary Steven Chu yesterday that the administration is “overreaching in efforts to regulate hydraulic fracturing at the federal level – despite the fact that states have an excellent track record of regulating the practice of hydraulic fracturing since its first use in Duncan, Oklahoma, in 1949.” If federal regulations on natural gas extraction are relaxed, as Inhofe is insinuating they should be, then economics alone will drive the production and distribution of LNG both in the US and abroad.
Manufacturers in the United States are the largest users of natural gas domestically, and the inexpensive fuel would be paramount in a rebound of the US industrial sector. Peter Huntsman, CEO of Huntsman Corp. says it best when he notes it is a “very short-sighted and bad public policy to allow our nation’s natural gas advantage to be stripped and sent overseas to build a new manufacturing base that would otherwise be built here in the US.” Unrestricted production and exportation of LNG would benefit gas producing energy companies and perhaps create some jobs in the process. Balancing the LNG supply and fueling domestic manufacturing, however, is an investment that promises long lasting economic growth for the country.
Energy Curtailment Specialists, Inc.