Message to opponents of US exports of LNG: Price volatility is part of the energy business. Deal with it.
The possibility that outgoing trade in LNG will make gas prices fluctuate is no reason to disallow exports. It nevertheless represents the core objection from manufacturers understandably wanting gas prices to be low and still.
Dow Chemical Co. is leading the antiexport case. In a Feb. 12 statement to the Senate Energy and Natural Resources Committee the company noted that rising supplies of domestically produced gas can boost US manufacturing.
"Companies in the manufacturing, transportation, and utility sectors are already making investment decisions based on today's competitive prices and the outlook for affordable and stable gas prices into the future," it stated. "These decisions will play out over the next 2 to 20 years."
If by this Dow means manufacturers are basing 20-year investments on current gas prices, they're making a big mistake.
Gas supply probably can't grow enough to meet projected demand at current prices. It surely can't grow enough if the market requires large new dry production, which it almost surely will.
Gas drilling has dwindled. The gas price is too low. As demand rises, supply of gas associated with oil will be absorbed and the gas price will rise. And it will fluctuate. It always does.
Manufacturers who find these conditions unacceptable should rethink their strategies.
In its February statement, Dow faulted criteria the Department of Energy is applying to decisions about LNG exports. They're too narrow, Dow asserted.
The company wants DOE to assess factors such as the effects of exports on gas supplies and prices and the price and volatility of LNG.
But DOE can't know in advance how an export proposal will affect the gas price. Nobody can. That's not a reason to restrict exports.
Dow seems mainly to want DOE to furnish a regulatory mechanism by which it and other manufacturers can suppress competition for gas supply. Congress and DOE shouldn't oblige.
