APGA Opposes the Large-scale Export of LNG

January 2013

Background

Recent advances in natural gas drilling have made access to our domestic natural gas reserves not only possible but also extremely advantageous for the U.S., resulting in the low natural gas prices enjoyed by consumers.   At these prices, natural gas vehicles (NGVs) are price competitive with gasoline thereby reducing our dependence on foreign oil; and, natural gas is on the upswing to replace coal for electric generation because of both its price and clean burning characteristics.

Favorable opportunities for low energy prices, widespread adoption of NGVs, and cleaner air are all maintained by the fact that our natural gas market is largely limited to North America and as such, is directly threatened by the large-scale export of natural gas in the form of liquefied natural gas (LNG). To date, 20 applications for the export of LNG have been filed at the Department of Energy and more are likely on the way. If just these facilities alone were to be built, approximately 45 percent of our country's daily production of natural gas would be shipped abroad.

APGA’s Position

APGA opposes the large-scale export of LNG because it jeopardizes the critical national goals of abundant and affordable energy, reduced dependence on foreign oil, and the opportunity for cleaner air by using natural gas for electric generation. 

Rationales for opposition

  1. Large-scale export of LNG will increase prices for homeowners and businesses around the country.  This assertion is not mere speculation. On January 19, 2012, the Energy Information Administration released its study on the price impact of LNG exports titled, “Effect of Increased Natural Gas Exports on Domestic Energy Markets.” The study verified the fact that export of LNG causes domestic price increases, and concluded that consumers could see a 3-9 percent price increase for natural gas and 1-3 percent increase in electricity prices due to LNG export[1]. This report significantly understates the potential price impacts of export as it utilized old data and did not examine the impacts of export levels beyond 12 BCF/day.
  2. NGVs have extremely competitive prices in comparison to conventional gasoline vehicles due to the significantly lower fuel costs. For example, the natural gas powered Honda Civic has a base price of $26,305, while a comparably equipped Honda Civic Hybrid costs $24,200[2]. When you consider that CNG can cost $1-2 per gallon less than gasoline, the fuel costs rapidly recoup the difference in upfront costs and would very likely provide lifecycle cost savings for owners. However, if 45 percent of our natural gas is shipped abroad, the price advantage of natural gas versus gasoline would disappear, making NGVs uncompetitive. This would mean that the U.S.  would lose its best chance to reduce dependence on foreign oil. In short, a goal of this and every preceding administration has been to take meaningful steps towards energy independence; and therefore, improved national security would be sacrificed in the name of short-term profits for LNG exporters.
  3. According to the Environmental Protection Agency, “Compared to the average air emissions from coal-fired generation, natural gas produces half as much carbon dioxide, less than a third as much nitrogen oxides, and one percent as much sulfur oxides at the power plant.[3].” These cleaner burning characteristics alongside comparatively lower natural gas prices are rapidly making natural gas the fuel of choice for electric generation and thereby taking the place of “King Coal[4].” In fact, for the first time in U.S. history, natural gas provided 32 percent of electricity equaling that of coal in April 2012.[5] If the U.S. ships large quantities of natural gas abroad, the cost advantage of natural gas would very likely disappear. The consequences of this are straightforward: coal returns to its dominant place in electric generation and as a result, air emissions continue to adversely increase further harming the climate and public health.

Conclusion

APGA believes that when important policies collide, nations must make choices. APGA believes that the wise policy choice at this time is to limit the export of domestically produced LNG in favor of pursuing higher national goals of energy independence, affordable energy and cleaner air. If you would like more information on APGA's position or would like to set up an interview, please contact us by email or by phone at 202-464-2742.

 

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