The Biden Administration’s move to pause approvals of new liquefied natural gas (LNG) export facilities has sparked controversy within the industry and among politicians. Citing concerns about potential impacts on domestic energy prices, this decision has raised eyebrows among experts who argue that it overlooks crucial evidence and could undermine both economic and energy security in the United States.
According to an analysis conducted by Dr. Dean Foreman, chief economist for the Texas Oil & Gas Association (TXOGA), U.S. LNG exports have not caused domestic natural gas prices to increase, but instead they may have spurred production and productivity gains, resulting in downward pressure on prices. This conclusion challenges the narrative that expanding LNG exports would lead to higher energy costs for American consumers.
In fact, data from the analysis reveals that while U.S. LNG exports have surged to near-record levels, domestic natural gas prices at Henry Hub, Louisiana, plummeted to their lowest real prices in over three decades in mid-February 2024. This contradicts the notion that LNG exports are driving up energy costs within the country.
Furthermore, the TXOGA analysis highlights the symbiotic relationship between LNG exports and domestic production growth. Increased LNG exports have incentivized incremental new production and spurred technological innovations, leading to improvements in resource recovery. This has not only enhanced the nation’s energy security but has also contributed to the expansion of estimated domestic recoverable gas resources.
Todd Staples, President of TXOGA, condemned the Biden administration’s decision as baseless, asserting that it jeopardizes American energy leadership and global energy security:
“This decision is a major mistake that puts American jobs and allies at risk and undermines the global progress made possible through increased use of natural gas. Reckless decisions like this squander our nation’s global energy leadership and force our allies to look to other nations, some of which are hostile to America, to meet their energy needs. It directly emboldens and strengthens America’s adversaries while hurting America. Other countries are already positioning to take advantage of this self-inflicted wound. It leads our nation in the wrong direction.”
“TXOGA estimates that nearly 30% of Texas’ total dry natural gas production ultimately is exported as LNG. Approximating the LNG industry’s impact across the value chain, given its sales (final demand) based on the wholesale value of natural gas, this conservatively suggests that LNG exports directly support 18,000 jobs throughout the value chain and nearly 54,000 jobs in total, including through direct, indirect and induced activities. In addition, Texas also provides about 60% of Louisiana’s total dry natural gas supplies, which includes consumption, net interstate movements, and exports.”
Dr. Foreman, for his part, spoke to his research’s results:
“Our research confirms that expanded LNG exports actually spur production and productivity gains, which help to drive prices down. Attributing higher U.S. natural gas prices to LNG exports is inaccurate and risks misguided energy policies that run contrary to the interests of U.S. and especially Texas.”
Opposition to the Biden administration’s export permit pause also come from a group of 25 Republican senators, who penned a letter to President Biden and Energy Secretary Jennifer Granholm urging the administration to reconsider the proposal:
“Without U.S. LNG exports, European leaders would have to decide between depriving their own citizens of energy or actively funding Russia’s war on Ukraine. Moreover, in December 2023, Russia exported LNG at record levels. Russia is also in the process of dramatically expanding its future LNG export capacity. Now, Iran-backed forces have provoked a second war in the Middle East and are threatening shipping lanes through which LNG is shipped to Europe and Asia. At the same time, Iran is seeking to benefit from the war by ramping its own domestic LNG exports to displace the very supplies it helped to disrupt.”
“Limiting U.S. LNG exports do not have any impact on the world’s demand for natural gas. Instead, countries including Russia and Iran will simply produce more energy that is subject to less stringent environmental regulations. As a result, limiting American LNG exports in the name of stopping climate change could do just the opposite and add to global emissions…We strongly urge you to stop this shortsighted effort. As the President of the United States and as the Secretary of Energy, you should be championing – not undermining – American LNG exports and the environmental, economic, and national security benefits to the United States and our allies.”
Opposition to the pause has been bipartisan, with nine House Democrats voting against Biden’s pause on LNG exports. Senator Michael Bennet, a Democrat from Colorado, spoke out against the pause as well, saying,
“I think it’s been very important for American liquefied natural gas to replace the natural gas that Russia was sending to Europe. I believe one of the United States’ massive strategic strengths is our energy, our clean energy and our fossil fuels.”
The American Petroleum Institute joined TXOGA’s call for the Biden administration to keep LNG exports going:
“This is a win for Russia and a loss for American allies, U.S. jobs and global climate progress. There is no review needed to understand the clear benefits of U.S. LNG for stabilizing global energy markets, supporting thousands of American jobs and reducing emissions around the world by transitioning countries toward cleaner fuels. This is nothing more than a broken promise to U.S. allies, and it’s time for the administration to stop playing politics with global energy security.”
The Biden administration’s pause on LNG export permits is a clear misstep that threatens to impede economic prosperity and energy security in the United States and with America’s allies across the globe. As the nation navigates its energy future, it is imperative to embrace policies that foster innovation, encourage growth, and prioritize the interests of American consumers and global energy stability.
