Monday, April 22, 2013

Congress on Shale Gas Exports


The relatively new process of fracking has given the US the possibility of being a low-cost world supplier of natural gas.
US producers of shale origin natural gas desire to export it in liquefied form. Chemical manufacturers are strongly opposed to exportation, which they say will increase the domestic price and increase their costs for production of petrochemicals. Both sides try to involve Congress in this dispute for a resolution favorable to its side.
I have said previously that the owners of the natural gas have the right to dispose of it in any manner they wish, including exports, and Congress should not be involved.
The original controversy was based on an assumption that with fracking only the US would be a possible supplier of low-cost gas. That seems to have changed. Chemical and Engineering News in its April 8 issue notes that there are other foreign countries which are significant producers or potential producers of natural gas. Saudi Arabia continues to be a significant supplier. Argentina has the third largest shale gas reserves and British Petroleum is already arranging production by the fracking process. In addition, China produces light olefins from coal and intends to add 20 million metric tons of capacity by 2020. 
All of these will obviously increase natural gas availability in foreign markets and reduce foreign prices. This automatically decreases the incentive to export from the US. Again, market forces are at work
Therefore, I again strongly suggest to Congress that it should have no part in controlling export of US produced shale gas.

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