The battle over exporting natural gas
Equipment used for the extraction of natural gas is viewed at a hydraulic fracturing site on June 19, 2012 in South Montrose, Pennsylvania.
We’ve been telling you on Marketplace about America’s abundance of natural gas as a result of the controversial drilling technology, fracking. One emerging debate is: Since we have so much, should we export it? Drillers want to, but big industrial buyers aren’t so keen, and want to keep as much as home as possible. They just formed a new group in Washington -- with corporate lobbyists -- to push back.
The new group, America’s Energy Advantage, represents natural gas buyers, like American chemical companies. They’re thriving now, because domestic natural gas is the cheapest in the world.
Question is, should the U.S. liquefy and export gas to countries like Japan, and China? The Obama administration’s thinking about it. But George Biltz at Dow Chemical says the U.S. shoule set limits.
“There is a range, a sweet spot that works for the country,” Biltz says. “Clearly, unfettered exports we don’t believe works for the country.”
America’s Energy Advantage argues exporting too much robs from domestic supply and drives up prices. A new study done for the Energy Department suggests the effect will be limited, and that the economic effect of exports is a net positive.
Perhaps the bigger pushback will come from oil and gas drillers -- reducing exports cuts demand for their product.
“If there isn’t enough demand for gas, prices are going to go down,” says analyst Nikos Tsafos at PFC Energy. “And companies are going to drill less. They’re going to build fewer rigs. They’re going to hire fewer people.”
Tsafos says the market may limit U.S. natural gas exports on its own -- long-term demand is iffy, as is financing for export infrastructure.
Still, stand by for a big Washington fight: Big drillers versus big buyers.