Historic mistakes should guide US on LNG exports

Political opposition to LNG exports by the US brings to mind monumental energy mistakes of the past.

The opposition comes from officials arguing that exports would raise the price of natural gas. It’s motivated, to some degree, by industrial gas users naturally want the commodity to stay cheap.

In a market with constant supply, new demand indeed would raise price. For now, however, US gas supply can expand to accommodate new consumption. Indeed, supply now tends to overreact to indications of demand growth as many producers respond to any uptick in price.

These conditions won’t last forever. The delivery system has physical limits. At some point, demand will push against those limits and raise price enough to stimulate capacity expansion.

Meanwhile, in a period of readily expandable supply and consequently suppressed price, gas users naturally want to preserve their comfort by foreclosing competing uses. Politicians shouldn’t help them.

Politicians make messes when they regulate consumption.

They did so in 1978 when Congress passed the Powerplant and Industrial Fuel Use Act, or FUA.

The law restricted the burning under industrial and utility boilers of oil, to lower imports, and natural gas, to preserve a commodity thought to be scarce for what were then called “higher uses.”

The preferred boiler fuels were coal and nuclear energy. FUA was passed before the Three Mile Island nuclear accident and the spread of fear about global warming.

The assertion of gas scarcity grew out of delivery curtailments created by market controls but assumed to relate to geology. The assertion and assumption could not have been more wrong. The misguided law they fostered was repealed during market decontrol in the 1980s.

Then the official worry was not that gas might be used for low purposes but that its price would “fly up.” That expectation was wrong, too.

What this history means for LNG is that politicians should let the market decide how much of it, if any, the US exports.

(Online Jan. 11, 2013; author’s e-mail: bobt@ogjonline.com)

Related Articles

Twists of activists’ dogma freshens view of global warming

07/02/2015

Fresh perspective on global warming, a topic that needs it, comes from a geologist.

Emerging producers offered guidelines for governance

06/26/2015 Like most worthy endeavors, governing oil and gas activity at the national level is easier said than done—especially where oil and gas never before...

New king reshaping Saudi oil industry; extent still unclear

06/19/2015

A new ruler is making important changes in the state-run petroleum industry of the world’s most influential oil-producing nation.

Energy prominent among US rules due in next 12 months

06/12/2015

Energy figures prominently in a regulatory blitz taking shape as the Obama administration approaches its end.

Political, technical problems seen for energy-subsidy reform

06/05/2015

Fossil-energy subsidies receive more talk than action, too much of it politically opportunistic.

Oil-demand curve’s flattening adds to pressure on OPEC

06/01/2015 When leaders of the Organization of Petroleum Exporting Countries meet in Vienna on June 5, they should heed a stern signal from the oil market.

Coast Guard cadets summoned to battle climatological foe

05/22/2015 Confusion evident in President Barack Obama’s commencement address at the Coast Guard Academy raises a question bearing on American foreign policy:...

OPEC production well above quota for second month

05/15/2015

Supply data out this week provide a useful reminder about behavior of the Organization of Petroleum Exporting Countries.

Quick supply change a vital factor in oil market recovery

05/08/2015

Large among questions hanging over an oil market groping for balance is the behavior of short-fuse supply.

White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts


Driving Growth and Efficiency with Deep Insights into Operational Data

When Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST



On Demand

OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST


Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected