The growing rebellion against Biden that threatens to cut off yet more gas from Europe

Americans are railing against record fuel exports as the US faces its own crisis, finds

Rachel Millard

2022-10-09T07:00:00.0000000Z

2022-10-09T07:00:00.0000000Z

Daily Telegraph

https://dailytelegraph.pressreader.com/article/281668258873528

Business

After weeks crossing the Atlantic, the 294-metre Murex gas tanker was finally tugged into the import terminal in Eemshaven, northern Holland, in early September. Loaded at Cheniere Energy’s export plant located on the Sabine Pass waters, which divide the US states of Louisiana and Texas, the 173,000-cubic-metre capacity ship carried vital gas to Europe as it battles to replace Russian supplies. But while its arrival was cheered by European leaders seeking solutions to a cost of living crisis stoked by soaring power costs, the local attitude where the shipment began its journey was less enthusiastic. In the US, too, natural gas prices are rising, pushing up household bills and leading some to question whether supplies should be going abroad at all. “Obviously we want to help our allies in need,” says Tyson Slocum, energy director at Public Citizen, a non-profit consumer rights lobby group founded by the veteran political activist Ralph Nader. “But it cannot come at the expense of sharp increases in domestic energy poverty.” The Henry Hub benchmark spot price has more than doubled since the start of the year, feeding into higher prices for US businesses and households. Growing disquiet over the rising prices raises difficult questions for President Joe Biden over the merits of export gas, even as the industry booms. The US’S gas exports used to be focused on relatively small volumes sent via pipeline to Mexico and Canada. That changed over the past 15 years, as the shale boom emerging from Texas’s Permian Basin coincided with growing global demand for cheap, flexible sources of gas. The US became a net exporter of gas in 2017 for the first time since the late 1950s. It has helped keep the world stocked as Russia strangles supplies to Europe amid its war on Ukraine. During the first half of 2022, the US overtook Australia and Qatar to become the world’s largest exporter of liquefied natural gas (LNG) – with about 11.2bn cubic feet per day chilled and piped onto tankers. About 10pc of all US supplies are now exported as LNG, with traders making hefty profits out of the large differences in the prices between the US and export markets. This year, the bulk has been sold to Europe and the UK, with US gas overtaking Russian pipeline supplies to Europe in July for the first time. But while gas in the US remains relatively cheap compared to Europe, prices have been climbing. Demand for air-conditioning as well as low coal supplies have driven demand and price higher, notes Emily Mclain, head of North American gas markets at Rystad Energy. Regional prices also depend heavily on local infrastructure and demand. However, exports have also played a role. A US government report last week flagged “record high” LNG exports. The industry is only set to grow, with about 20pc of US gas set to be exported by 2030 as new terminals are built. Centrica, the owner of British Gas, recently signed a 15-year deal to import 1m tonnes of LNG a year from a new floating terminal in Louisiana that is scheduled to be operational by 2026. Deals like this boost the US gas sector on the world stage, but are raising difficult questions for President Biden as costs for many Americans climb. Once relatively isolated from global price shocks, the US’S gas market is now increasingly exposed to global events. In February just before the war in Ukraine, a group of senators urged the government to “limit US natural gas exports and examine their impact on domestic energy prices”. North-eastern states are struggling particularly badly with high gas prices. President Biden is under intense pressure on the issue ahead of the mid-term elections in November. Energy prices are the “Achilles heel,” of this administration, argues Slocum, who wants the US government to look again at the impact of exports on US prices, jobs, and the environment, and consider measures such as price caps on exports. “Obviously, there’s a crisis in Europe, but the export boom comes with problems for Americans,” he says. There is no easy solution, however. As Cicio notes: “Exports to Europe specifically do not add to the problem. If the LNG shipments did not ship to Europe, they would be shipped to other countries.”

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