Testimony of Tyson Slocum, Energy Program Director, Public Citizen, before the U.S. Senate Energy & Natural Resources Committee
Read testimony here.
• The campaign to justify expanded LNG exports prioritizes the financial interests of natural gas producers and LNG exporters at the expense of U.S. households and American value-added manufacturing.
• Natural gas producers, frustrated by stubbornly low domestic prices, understand that the easiest path to increase prices—and their profits—is globalizing U.S. benchmarks, which ramping up LNG exports will accomplish.
• LNG exports serving as a foundational economic policy sounds like a Qatari model of growth, latching U.S. GDP to volatilely-priced finite natural resources. What sets America apart is not our aptitude at exporting raw natural resources, but the valueadded of our manufacturing and high tech innovation—the very sectors threatened by higher prices exports will cause.
• The ability of LNG exports to increase American influence for geopolitical ills, such as countering Russian natural gas supply to Europe, is limited. Such commodity diplomacy ignores the fact that LNG export destinations are determined not by the U.S. Secretary of State, but by whoever will pay the highest price.
• Australia offers an important cautionary tale for the United States. Australia committed to unfettered LNG exports, launching the country to becoming the 2nd largest LNG exporter in the world. But it came at a massive cost: domestic gas prices have skyrocketed, forcing the country to pass a law to attempt to limit exports. In the meantime, four LNG import terminals for the east coast have been proposed to alleviate the supply and price emergency.
• The trend of LNG exports shifting away from long-term, fixed price contracts and towards spot and short-term sales amplifies that LNG export destinations will be determined by whichever market is the most expensive. Nations where gas demand is growing and LNG import facilities are near capacity (Asia) will feature higher prices than those regions where demand is falling and LNG import terminals are operating under capacity (Europe).
• European natural gas demand is projected to significantly contract in the coming years, in part because of policies promoting low-cost renewable energy. Shrinking European gas demand is in sharp contrast to where natural gas will continue to boom …