US industry wants to curb gas exports

new York Not only in Europe, but also in the USA, there is a fear of rising energy prices in winter. The industry is already calling for the export of liquefied natural gas (LNG) from America to be curtailed.

In a letter to Energy Secretary Jennifer Granholm, the Energy Consumers Association, Industrial Energy Consumers of America (IECA) writes: “We urge you to act immediately under the Natural Gas Act to prevent a supply crisis and price spikes for consumers this winter by lowering export quotas for liquefied natural gas exporters. ”That should bring US inventories to the level of the five-year average.

During a visit to Poland, however, US Minister Granholm assured that the US would work closely with European partners to ensure that enough gas would be available in winter. The rise in gas prices raised serious questions about security of supply in Europe.

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The US and Europe would have to defend themselves if energy-producing countries “manipulate the supply in order to benefit from it,” said Granholm, referring to the allegations that Russia is deliberately not supplying Europe with more gas.
Not least thanks to the controversial fracking technology, the United States has transformed itself from an energy importer to an energy exporter in recent years.

In both 2019 and 2020, the US was able to meet its own energy needs and was a net energy exporter. So far, the increase in gas prices in the USA has been limited compared to Europe.

While gas prices in Europe have more than quadrupled over twelve months this year, they have only doubled in the US. The higher prices in the USA were due, among other things, to strong hurricanes like Ida, which in some cases interrupted natural gas and oil production for weeks because the destroyed plants first had to be rebuilt.

Now winter is approaching and the camps are not filling up fast enough in America either. According to the “Wall Street Journal”, the supply is currently seven percent below the five-year average. No wonder the manufacturing industry is concerned and wants to keep as much natural gas in the country as possible.

In the first half of the year, the USA exported ten percent of the natural gas it produces. Before the US expanded its facilities for export in 2016, exports were just one percent. US industry has always disapproved of gas exports because it feared that it would increase energy prices for the domestic economy. In its letter, the lobby association IECA therefore also calls for pending permits for export facilities to be checked “whether they are in the general interest”.

“Many manufacturers can then no longer keep up in the market”

In the letter, the association warns that even higher gas prices could have serious consequences for companies. “Many manufacturers can then no longer keep up in the market,” he writes. “In 2008 we saw that thousands of industrial plants had to close because they were no longer profitable,” he recalls.

According to S&P Global Platts Analytics, “there are currently hardly any significant levers left that could dampen further price increases”. In the USA, all options for switching from gas to coal have already been exhausted, write the experts from S&P. “Because of the continuing upward march in liquefied gas prices, heating oil is now coming into play as the next alternative to reduce the demand for gas,” it says there.

However, in a study on the possible conversion from gas to oil, Goldman Sachs points out that oil reserves are also currently rather low. The tight gas market worldwide will therefore lead to higher oil prices when the industry switches from gas to oil.

Theoretically, the US energy companies could increase production. However, many have promised their shareholders not to do this so quickly in order to keep margins high thanks to higher prices. According to Baker Hughes, one of the leading oil service companies in the world, 34 percent fewer natural gas production facilities were active on September 10 than a year earlier, writes the “Wall Street Journal”.

More: Rising gas prices are just a foretaste of what is in store for people

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