Fight over LNG exports pits energy industry against manufacturers, chemical industry

The fight over whether the Obama administration should allow the export of liquefied natural gas has intensified, and now pits the oil and gas industry against manufacturers and the chemical industry.

A coalition of businesses — including Dow Chemical, the country’s largest steel producer Nucor and the world’s leading aluminum producer Alcoa — has joined to promote the benefits of limiting liquified natural gas exports.

The group, America’s Energy Advantage, argues that record low natural gas prices are fueling U.S. manufacturing by lowering costs, providing cheap energy to consumers, increasing energy security and creating jobs. Allowing more natural gas to be exported would jeopardize America’s manufacturing renaissance by raising natural gas prices, the group says.

“The shale gas boom in this country has really brought a competitive advantage to the United States,” said George Biltz, vice president of energy and climate change at Dow Chemical.

Blitz added that unrestricted exports “would raise prices dramatically, would have a very negative effect on this industry and a massive ripple effect economically.”

The Houston Chronicle reports that the group is promoting natural gas as a strategic resource that is better used as a power source for U.S. manufacturing facilities and a tool for creating plastics and chemicals, rather than as an export.

“We need to be smart and take a balanced approach in using our valuable resources,” said Jennifer Diggins, public affairs director at Nucor. “We have an opportunity here – one that should be considered an advantage for our domestic players.”

According to Blitz, the industrial sector uses 40 percent of the natural gas in the U.S.

However, efforts by AEA have been met with fierce resistance from the oil and gas industry, which argues that limiting exports is misguided and will hurt the U.S. economy.

“Short-sighted efforts by a few industrial users to restrict exports in an apparent attempt to control prices would deprive American families of the wider benefits of lower costs and increased job creation,” said Jack Gerard, CEO and president of the American Petroleum Institute, in a statement.

“Restricting exports of energy as a ‘strategic resource’ makes no more sense than unnecessarily restricting the export of chemicals, agriculture products or cars, and such a backward move could violate international trade rules,” Gerard added.

The latest study on natural gas exports released by the Energy Department showed that the U.S. economy would benefit from natural gas exports under every cost scenario analyzed.

“In all of these cases, benefits that come from export expansion more than outweigh the losses from reduced capital and wage income to U.S. consumers, and hence LNG exports have net economic benefits in spite of higher domestic natural gas prices,” reads the study. “This is exactly the outcome that economic theory describes when barriers to trade are removed.”