Get Ready for Higher Prices and Less Energy Security: Our Natural Gas Reserves Are Being Plundered For Export
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This article was published in partnership with GlobalPossibilities.org.
Unlimited export of U.S. natural gas would have enormous implications on the future of the nation's economy, environment and domestic energy choices. Yet a burgeoning chorus in Congress, on both sides of the aisle, is calling for the swift approval of 19 liquid natural gas (LNG) export permits.
The acceptance of these permits would unleash an unprecedented frenzy of domestic high-volume hydraulic fracturing, or fracking, just to meet daily production rates under decades-long contractual obligations. If accepted, the total of the permits currently under review by the Department of Energy for LNG export would be equal to 28.54 billion cubic feet (Bcf) per day, approximately 45 percent of what the U.S. is projected to consume daily in 2013, according to the U.S. Energy Administration.
Congressional supporters of unlimited exports argue that turning the U.S. into a major net exporter of LNG would not only boost our economy and create jobs, but also -- seeming to defy the basic tenets of supply and demand -- sustain low domestic natural gas prices, increase our energy security and propel us to energy independence. Some have even contended that such exports would smooth out boom-and-bust cycles and stabilize the price of natural gas.
By law, the Natural Gas Act requires the Department of Energy to grant export permits of LNG to non-free trade agreement countries only if such exports are deemed in the public interest. LNG exports to countries the U.S. has free-trade agreements with, such as Canada and Mexico, do not require a public interest determination.
On the Senate floor last month, Sen. James Inhofe (R-OK) argued, "What could be inconsistent with this for the public interest? This is something that would be cheaper gas for us and give us total independence in a matter of weeks."
At an event last year sponsored by the trade group America's Natural Gas Alliance, Alaska Sen. Lisa Murkowski, the top Republican on the Senate Committee on Energy and Natural Resources, said, "Exports of natural gas ... are not expected to play a significant role in setting prices here at home."
In a statement released by his office, Sen. Mark Begich (D-AK), told AlterNet, "Concerns that natural gas exports will significantly drive up the price of natural gas for domestic use are overblown."
He added, "Additionally, even with dramatic growth in LNG markets abroad and use of natural gas at home, the U.S. has more than enough gas to satisfy both markets for a long time."
But many experts close to the issue -- backed by multiple studies, real-world numbers and historical trends -- say these elected leaders are either not leveling with the American public or are simply ill-informed.
"Members of Congress are not energy experts so they are easily confused," said Tad Patzek, chairman of the Department of Petroleum and Geosystems Engineering at the University of Texas. "And their religion is free market. It's got nothing to do with reality, especially energy markets."
Patzek, an expert in unconventional gas recovery who has extensively studied U.S. shale plays, called congressional boosters of unlimited exports "delusional" in an interview with AlterNet.
"This is the same argument over and over again," he added. "If we have a boom, then twice the boom is always better. Right? Well, not necessarily."
Domestically, natural gas remains cheap, hovering around $3.50 per thousand cubic feet (Mcf). But in Europe and Asia, respectively, prices are three to nearly five times that amount.
The current glut of natural gas in the U.S. has kept prices low for both consumers' electricity bills and for energy-intensive areas of the economy, such as the revitalized domestic manufacturing sector, which uses natural gas for feedstock. But over the last couple of years, gas companies have been losing money because supply has outpaced demand and returns on natural gas at its domestic price became too low to warrant the cost of production.