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Biden's Natural Gas Export Pause Is Good for the Working Class

Low-income families struggle to pay their home energy bills. A report released this week by the National Energy Assistance Directors Association (NEADA) found that one out of six households are behind on their home energy bills and the amount they owe to their utilities has reached record levels. The increase in amount they owe reflects continued high home energy prices during winter and summer months.
Americans are accustomed to seeing the price of gasoline swing up and down due to global market conditions that we have limited control over. But the price of natural gas used to heat our homes and run power plants has largely been insulated from sudden price shocks because of the nation's limited capacity to export domestic natural gas production, usually in the form of liquified natural gas (LNG).
LNG exports were nonexistent before 2016. But in just a few short years, the United States has become the world's largest LNG exporter, which fuels record domestic natural gas production. The U.S. now produces as much natural gas as the next two largest producing countries, Russia and Iran, combined. In 2015, only about 7 percent of U.S. gas production was exported. Now that proportion has risen to about 20 percent of production.
Nearly 70 percent of oil and gas executives believe that the increase in exports is ending "the age of inexpensive U.S. natural gas," according to a September 2022 survey by the Federal Reserve Bank of Dallas. A Goldman Sachs energy analyst said, "The U.S. exports LNG and exports energy security to the rest of the world, but imports volatility." Now, for the first time in U.S. history, the rising share of natural gas exported in the form of LNG is radically upending domestic energy markets. As a result, American families are competing with Berlin and Beijing for natural gas that is shipped overseas.
The Federal Energy Regulatory Commission (FERC), in a recent assessment of U.S. winter energy market conditions, concludes that growth in exports, including from LNG export facilities "will place additional pressure on natural gas prices this winter" and added that the export boom "has integrated formerly disparate North American regional natural gas markets into the global market."
There will be increased pressure on domestic markets because even more LNG production facilities are in the construction pipeline, which will lead to even greater exports of US produced natural gas Federal energy forecasters expect LNG export capacity from the U.S., Canada, and Mexico to more than double by the end of 2027 due to the addition of 10 new terminals and terminal expansions. If it wasn't for the Biden administration's pause on pending applications, by 2036, about 35 percent of U.S. natural gas production would be expected to be exported, with about 25 percent leaving the country in LNG tankers, according to an analysis of federal projections.
The energy industry has disingenuously pitched exported natural gas as a climate solution. However, a recent analysis by Cornell University professor Robert Howarth found that the climate impacts of LNG are worse than that of coal, partly due to the large volume of leaks into the atmosphere and that large amounts to greenhouse gas emissions are derived from the expensive and energy-intensive process used to freeze gas into liquified form. And if that wasn't bad enough, another analysis found that if all LNG export projects in the pipeline are approved, the resulting greenhouse gas emissions equal that of more than 1,000 coal-fired power plants. One gas export terminal in Texas, for example, was a leading contributor to the region's air pollution jumping 83 percent in recent years.
Congress requires the Department of Energy to evaluate whether LNG projects are in the public interest. However, the agency does not currently consider the negative impacts on the climate, vulnerable communities near LNG plants, and prices paid by consumers, especially those with limited incomes. That's why President Biden hitting "pause" on pending applications was necessary in order to comply with the law.
The administration is finally coming to its senses and announced last week that it will begin take into account the public interest in keeping prices under control. Last week the administration announced a "temporary pause on pending decisions of Liquefied Natural Gas exports....During this period, we will take a hard look at the impacts of LNG exports on energy costs, America's energy security, and our environment."This pause on new LNG approvals sees the climate crisis for what it is: the existential threat of our time.
The arguments in favor of increased LNG exports don't stand up to scrutiny. A year ago, the industry argued that it would help European countries cope with the sudden cutoff of Russian gas at the start of the war in Ukraine. But that proved to be misleading. Over the past 12 months, the share of gas exported to European countries has been falling, and the share exported to Asia has been rising. China, South Korea, and Japan are likely to be the main destinations for U.S. gas exports for years to come.
The policy announced last week by the White House to review the economic, environmental, and community impact of new LNG facilities in an important first step in ending price volatility in natural gas markets in the U.S., reducing economic pressures on low income families and scaling back the environmental impact associated with producing LNG.
The White House should move quickly to get their review in place and reach out to low-income communities, environmental groups and others concerned about the environmental impact associated with increasing LNG exports and the increase in domestic prices on those who can least afford it.

Feb 12, 2024 14:13
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