Exploring Hydrocarbon Depletion
Page added on February 23, 2013
The free market is at odds in the debate to export more of America’s vast natural gas resources — energy officials support an expansion of the overseas market but some manufacturing executives object saying it would drive up prices and eliminate jobs.
Dow Chemical is leading the effort to convince Congress and the Obama administration to show restraint in approving more than a dozen requests to export natural gas in a liquefied state.
Exportation would decrease the supply at home thereby raising prices, Dow Chemical argues, forcing them to cut back on their purchases of natural gas as a commodity in their products and to produce energy.
Andrew N. Liveris, chairman and chief executive officer of Dow Chemical Company, says they are experiencing a “manufacturing renaissance” and that policy makers should put limits on exports so Americans can “have our cake and eat it too.”
“Why should someone overseas benefit from our bounty?” Liveris asked the Senate Energy and Natural Resources Committee last week. “The conversation we should be having is adding jobs.”
“We care about agriculture in this country, we care about defense, we should care about energy,” Liveris said. “Let’s use natural gas for our economy first.”
The issue has divided top industry heavy hitters. Dow Chemical along with Eastman Chemical and the American Public Gas Association split recently with the National Association of Manufacturers to form their own group, America’s Energy Advantage.
“Let the free market work,” Ross Eisenberg, vice president of energy and resources policy for the National Association of Manufacturers told the Senate panel. “We think we can have it all here.”
Jack N. Gerard, president and chief executive officer of the American Petroleum Institute, says the U.S. is the largest producer of natural gas in the world surpassing Russia, and that exportation should be approved before the market slows or dissipates.
“The market will continue to drive the price down,” Gerard assured the lawmakers.
Natural gas is a key component used in thousands of consumer products including cars, appliances, paper, steel, plastic products, pharmaceuticals, and fertilizer as well as energy to power home heating for tens of millions of consumers.
The Energy Department later this year is expected to make decisions on 16 pending applications for liquefied natural gas export terminals. Currently, exports are only allowed to countries with which the U.S. has free-trade agreements, leaving out key markets in Europe and Asia.
However, Sen. John Barrasso (R-Wyoming) in January introduced legislation that would give North Atlantic Treaty Organization (NATO) member nations including Japan the same preferential treatment allowing them to receive the U.S. exports.
By making it easier to export LNG, the bill is designed to help increase energy security among U.S. allies and help reduce their need to purchase oil and gas from countries such as Russia and Iran.
“This will expand economic opportunities across America and help lower our nation’s trade deficit,” Barrasso said.
The ability to extract the energy through the process of hydraulic fracturing, or fracking, has created a massive quantity of natural gas, which industry insiders estimate would be a 95-year supply with the current levels of consumption.
“We’ve seen a paradigm shift, one of scarcity to relative abundance,” said Sen. Lisa Murkowski (R-Alaska).
Kenneth B. Medlock, senior director of the Center for Energy Studies at the James A. Baker III Institute for Public Policy, urged the panel to “allow markets to do what they have always done.”
Gerard agreed: “The worst thing for us to do is get involved in setting the price in a controlled market.”