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State, national columnists

Natural gas exports will raise prices – soon

By From page A8 | May 03, 2014

Because of hydraulic fracturing in states such as North Dakota and Wyoming, Californians and other Americans have enjoyed lower natural gas prices over the past two winters than anytime in the past 15 years. That continues right up to this moment.

But if the natural gas industry and the Obama administration have anything to say about it, today’s relatively low-cost heating and cooking may soon be matters of nostalgia.

That’s the meaning of the three approvals already issued by the Obama-appointed Federal Energy Regulatory Commission for either building new terminals to export liquefied natural gas or to convert existing import plants to export facilities. More are likely to be approved soon.

Californians should well remember liquefied natural gas, natural gas frozen into a fluid state near its source and then shipped around the world for use in places that don’t produce their own. The new American export plants, carrying benign-sounding names like Cove Point and Sabine Pass and Jordan Cove, aim to send liquefied natural gas to places like Europe, Japan, Korea, China and India. They’ve gotten new impetus from ongoing disputes between Ukraine and Russia, source of most of Europe’s natural gas.

Less than 10 years ago, Californians were battling over whether and where to put plants for importing liquefied natural gas, the result of a decision by the state Public Utilities Commission to give up some of the state’s reserved space on pipelines bringing gas here from Texas, Oklahoma and Colorado.

The answers were no and nowhere. Proposals for plants near Eureka, Oxnard, Long Beach and Santa Monica all died because companies promoting liquefied natural gas imports never proved the state would ever need gas imported by sea. The later discovery of vast quantities of gas right in California, available if the massive deposits in the Monterey Shale geologic formation are ever fractured, or fracked, means California may soon need no imported gas at all.

So this state dodged a financial bullet, not getting stuck with hyper-expensive liquefied natural gas.

But prices here will nevertheless rise because of the export licenses now being handed out for gas the industry has defined as “surplus.”

This likely fact of life emerges in a remarkable letter sent to Alaska’s Republican U.S. Sen. Lisa Murkowski last fall by a top federal Energy Department official.

Murkowski has pressed for quick approval of a liquefied natural gas export facility in her state, warning that “The United States has a narrowing window of opportunity to join the global gas trade.” Seeking oil- and gas-related profits and jobs for Alaska, Murkowski never acknowledges the certain effect exports will have on domestic gas prices, sure to rise if the current surplus goes overseas.

In California, price effects will probably be immediate with the opening of planned liquefied natural gas export plants near Coos Bay, Ore., and near Prince Rupert on the coast of British Columbia. Both would take allegedly surplus gas from western Canada fields that now supply California and the Pacific Northwest.

But Federal Energy Regulatory Commission doesn’t care, according to its letter to Murkowski. “We take very seriously the investment-backed expectations of private parties,” wrote Deputy Assistant Energy Secretary Paula Grant. Would the Federal Energy Regulatory Commission rescind an export license if domestic gas prices rise precipitously because of that permit? No, said Grant. “DOE has no record of having vacated or rescinded an authorization to import or export natural gas over the objections of the authorization holder.”

The Energy Department is also ignoring protests by other U.S. industries whose recession recoveries have partly been fueled by low gas prices.

A group of firms led by Dow Chemical has demanded that the Federal Energy Regulatory Commission – which works hand-in-glove with the Energy Department – slow the rush to sell off America’s energy bonanza.

The Federal Energy Regulatory Commission, the companies say, should “clearly articulate in advance its criteria” for deciding what is in the public interest.

So far, no response, which indicates that even with a majority of commissioners appointed by an allegedly consumer-oriented Democratic president, the Federal Energy Regulatory Commission is no more responsive to the interests of utility customers than it was during the energy crunch of 2000-01, when Republican George W. Bush was president and the commission refused to stop predator companies that cheated Californians out of more than $10 billion.

It all assures gas prices here will rise sharply in the next year or two unless California’s congressional delegation unites to put the brakes on liquefied natural gas exports, and soon.

Thomas Elias is a California author. Reach him at [email protected]

Thomas Elias


Discussion | 1 comment

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  • The MisterMay 03, 2014 - 7:26 am

    I told you... didn't I tell you... that Obama was quietly working a deal through the new TTIP trade deal with the EU for the EU to stop buying Russia's natural gas because we, the US, would supply them. Our oil fields have been producing less and less natural gas since the peak in 2011... and now Obama is taking from our shrinking supply to power an entire continent. Is he mad!? Our supply will be slashed and availability and rationing will become our greatest concern along with hugely increased costs. We, the US, have no obligation to Europe... they are not starving or freezing. Why would Obama devastate our energy supply and our economy by giving Europe OUR natural gas? He must be an idi0t or an evil SOB... and this issue is your proof.

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