A surge this year in U.S. LNG exports — some with long-term contracts to Asia — is driving up domestic natural gas prices and contributing to uncertainty about the reliability of the electric grid as winter begins, according to consumer watchdog Public Citizen.
Tyson Slocum, of Public Citizen | © RTO Insider LLC
LNG exporting companies must seek approval from the Department of Energy as well as from FERC. But DOE is not scrutinizing the impact of the growing exports on domestic markets, Public Citizen’s Tyson Slocum said in a news conference Thursday.
Public Citizen and seven other consumer groups less than a month ago appealed to DOE to use its statutory authority and order a “substantive analysis” as required by the Natural Gas Act to determine the impact of additional U.S. export terminals on domestic markets.
In a letter to Energy Secretary Jennifer Granholm, the consortium said that the exports are “binding American household energy bills to global calamities, resulting in a domestic energy pricing crisis.” They argued that DOE must develop a better analytical tool to measure the impact of unbridled LNG exports. The letter also noted that LNG exporters are charging European customers whatever the market will bear.
“To protect our European allies from price-gouging, DOE must condition any export authorization utilizing a global energy security justification to be subject to a cost-of-service standard tied to the landed delivery price,” the groups reasoned.
Slocum argued that DOE’s reliance on an economic study rather than a detailed analysis of every LNG export application is at the heart of the problem.
“The Department of Energy relies almost exclusively on a 2018 macroeconomic study,” he said. The study “concludes that exports at roughly the same levels that are being exported today will provide net economic benefits. They projected no increase in costs in natural gas prices domestically.
“And the report that the Biden administration relies upon from 2018 states that even if domestic energy prices were to increase, the income that families would receive from their stock ownership in LNG export terminals would exceed any increase in their monthly energy bills, which is a preposterous and wholly unsupported assertion,” he said.
In response to a question, Slocum said the consumer groups have been talking to congressional members about the issue.
John C. Allaire, a veteran environmental manager for the oil and gas industry who is now opposing a proposed LNG terminal in Texas, said China was the second largest importer of U.S. LNG last year. “But they’re not our friends,” he said. “It’s not in the interest of the U.S., but we don’t have a long-term plan. Our plan is to get it out of the ground and sell it to the highest bidder.”
DOE’s efforts to jumpstart the production and use of hydrogen in the U.S. through $8 billion in matching grants to assist industry and local governments create hydrogen hubs is likely to further complicate matters. At least two of the hubs DOE wants to fund will produce hydrogen from natural gas.
Because blue hydrogen producers will be dealing “with increasingly expensive feedstock costs to acquire that natural gas, and they’re going to be in direct competition with LNG exporters, I just don’t see that LNG exports are consistent with these efforts to try and build a domestic hydrogen production economy in any sort of meaningful way,” said Slocum.