Cheerleading the argument for exporting our newly developing bounty
of natural gas, Mr. Joe Nocera regales us in his recent New York Times
op-ed "Energy Exports Are Good!" with a plethora of reasons of why we should
sanction the unbridled export of this newly evolving American treasure.
He calls into question the motives of Dow Chemical in their lobbying to
keep a lid on gas exports given the fact that Dow has a minutiae
interest in a Gulf Coast facility originally built to import Liquified
Natural Gas (LNG) and, along with our new natural gas bounty, is being
converted to handle gas exports.
Dow's argument, as put forward by Mr. Andrew N. Liveris, chairman of
Dow Chemical, is that the newly found gas offers"a historic opportunity
to streghen the economy, increase national competiveness and create
jobs." Nocera then goes on to instruct us that Liveris' real objective
is "are you ready for this-limiting gas exports" given Liveris' stated
agrumentation that the new jobs the natural gas boom is expected to
create, is dependent on "affordable" and "plentiful supply."
While Nocera is instructing us on the benefits of gas exports, almost
concurrently the European Union announced this past week that it is
opening an investigation of myriad oil companies over suspected price
manipulation bringing to the fore the thesis that pricing on the international oil
market has nothing to do with supply and demand (please see "EU's Oil
Probe Years Overdue. Targets Wrong Benchmark" 05/16/2013).
And that is the point that is consistently overlooked. Natural has is unique in that it is priced both globally and domestically. While American manufacturers such as Dow or Dupont
are paying about $4/mmbtu, Japanese manufacturers are paying nearer
$18mmbtu. An enormous difference, and in this writer's opinion, a
reflection of and on the distortion of the trading dynamics for virtually all energy
commodities traded internationally.
Consider the following. The United States has become natural gas
self-sufficient. No natural gas is imported into the U.S. market and no
natural gas is exported. The American natural gas market is therefore
uniquely American and subject to clear oversight by the Federal Trade
Commision and the Justice Department. Any attempts at collusion between
U.S producers would result in jail time for those so engaged. This, as
opposed to the manipulations of such as OPEC as but one instance, for
oil prices on the international market, and whatever new findings that will be borne out
by the EU investigation. Permitting unlimited exports of U.S.
natural gas would be tantmount to exposing the U.S.-traded natural gas
market to the same supply-demand discipline destruction that have
impacted virtually all energy products traded on the commodity exchanges worldwide.
Unlimited exports of U.S. natural gas without restoring honest supply-and-demand-based markets worldwide will permit us to kiss goodbye to the
jobs that would have been created, as gas prices will be pumped to
artificially determined world levels, much to the glee of the 'oil patch.'