Get Ready for Higher Prices and Less Energy Security: Our Natural Gas Reserves Are Being Plundered For Export
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When criticisms of the NERA study began pouring in, a bipartisan group of senators, including James Inhofe (R-OK), Mary Landrieu (D-LA), David Vitter (R-LA) and Mark Begich (D-AK), followed up with a letter of their own to Secretary Chu, insisting he listen to "the sound science and economic theory that comprises" the study's conclusions.
But the NERA study was not only assailed for questionable modeling and omitting economic impacts on the environment, health and local jobs -- such as farms and the businesses they support -- but also for NERA's troubling history of conducting favorable studies for both the tobacco and coal industries.
In a January 2013 letter to the Energy Department, Sen. Ron Wyden (D-OR), chairman of the Senate Committee on Energy and Natural Resources, ripped the NERA report, calling it "seriously flawed" to the point of rendering "this study insufficient for the Department to use in any export determination."
Shortcomings Wyden highlighted include NERA using two-year-old energy figures to project the domestic consumption of natural gas, failing to fully assess the effect of rising prices on households and businesses, inadequately accounting for production impacts on various regional markets, and omitting the result of higher prices on different socioeconomic groups. All of which, Wyden noted, the Energy Department is tasked to assess in order to meet public interest determinations under the Natural Gas Act.
After its release, Rep. Edward Markey (D-MA), the top Democrat on the House Natural Resources Committee, said the study reveals, though downplays, that such exports would "constitute a massive transfer of wealth from working Americans to natural gas production and export companies."
"Most Americans don't own stock in natural gas companies, but nearly all Americans use natural gas and buy goods created using low-cost natural gas," Markey spokesman Burnham-Snyder told AlterNet. "Unlimited exports of natural gas will benefit only a very few, while leaving the rest of America to pay the increased costs from higher natural gas prices."
The Energy Department first commissioned a companion study conducted by the Energy Information Administration (EIA), an independent branch of the Department. The study, published in January 2012, focused on how increased natural gas exports would impact domestic consumption, production and prices.
The report concludes:
Increased natural gas exports lead to higher domestic natural gas prices, increased domestic natural gas production, reduced domestic natural gas consumption, and increased natural gas imports from Canada via pipeline.
Yet even this EIA assessment, as Wyden noted to the Energy Department, made its calculations based on estimated export volumes far lower than the total of the permits now under review. The EIA projected between a low volume of 6 billion cubic feet per day and a high volume of 12 billion cubic feet per day. So even its high range is dwarfed by the roughly 29 billion cubic feet per day now being proposed.
But the findings of an independent Purdue University study, released after the NERA analysis, were even more stark and directly challenged NERA's conclusions.
"The major conclusion of this research is that permitting natural gas exports causes a small reduction in US GDP and also increases GHG emissions and other environmental emissions such as particulates. There is a loss of labor and capital income in all energy intensive sectors, and electricity prices increase."
The authors continue, "The major differences between our results and the other major study (NERA) are that we get considerably higher natural gas price impacts, and we do not get export revenue as large. The higher natural gas prices cause pervasive losses throughout the commercial, industrial, and residential sectors."