Large, industrial users of energy are frowning on the Trump administration’s attempt to make natural gas exports a key part of its pro-growth agenda, warning that it will hurt U.S. manufacturing and reduce jobs in the long run.
“Excessive [liquefied natural gas] export approvals by the U.S. Department of Energy (DOE) to countries with which the U.S. does not have a free trade agreement is inconsistent with President Trump’s ‘America First’ and ‘fair-trade’ policies, and poses a significant long-term threat to energy-intensive trade-exposed (EITE) industries’ competitiveness and jobs,” said Paul Cicio, president of the Industrial Energy Consumers of America, in a Wednesday letter to the secretaries of energy and commerce, Rick Perry and Wilbur Ross, respectively.
A 100-year supply of natural gas is a “myth,” if the rate at which natural gas is slated to be exported is achieved, Cicio said. He cited recent Energy Information Administration projections that supported only 12 billion cubic feet per day of natural gas exports through 2050. The projection “demonstrates that 56 percent of all natural gas resources will be consumed in that time frame,” he wrote. “For companies that build facilities to last 50 years or more, that is of great concern.”
Some of the businesses that Cicio’s group represents are large chemical companies that rely on steady and cheap sources of natural gas as a feedstock. The recent shale energy boom has caused many companies that had proposed building facilities outside of the country to return to the U.S. because of the low cost and adequate supplies of natural gas that now exist.
But that could change. The amount of natural gas that the Energy Department is approving for export is now equal to 20.6 billion cubic feet in volume per day, nearly double what the Energy Information Administration projected out to 2050. Cicio said the current rate of natural gas exports “is equal to 170 percent of today’s total residential demand.”
He said the Energy Department’s mandate under the Natural Gas Act is to determine whether an LNG export application to a non-free trade country is in the public interest. Cicio urged Ross and Perry to “quickly” enact recommendations for establishing “prudent common-sense safeguards to protect consumers, the economy and which encourages manufacturing companies to continue to invest and create jobs.”
The group wants the administration to enact a policy for LNG exports that is consistent with Trump’s fair trade and America First policies and enact a moratorium on further export approvals until regulations that define the “public interest” are proposed and finalized.
“The fact is that utilizing natural gas in manufacturing, as compared to exporting it, creates eight times more jobs, twice the direct value added per year and 4.5 times the direct construction jobs,” Cicio said. He wrote that the last three public interest determinations made by the energy agency under its most recent approvals avoided any such comparison.
“One of the studies describes the significant negative impact of LNG exports when it stated, ‘it raises energy costs and, in the process, depresses both real wages and the return on capital in all other industries,’ while another study states that exporting LNG increases domestic prices and reduces natural gas prices for foreign buyers of LNG,” he wrote.
“The combined net effect is that U.S. manufacturers lose relative global competitiveness,” Cicio stated, adding that it is better to put in place safeguards than to gamble with the nation’s economy.
He said representatives from the oil and gas industry, such as the American Petroleum Institute, with some members of Congress from natural gas-producing states, have argued that safeguards are not needed. “We hope that they are correct,” Cicio said. “However, trillions of dollars of manufacturing assets would be at risk, if the assumptions are wrong. This is not an acceptable gamble. It is better to have safeguards in place.”
