IECA: Domestic Gas Prices Up 35.6 Pct Since Approval of First LNG Export Terminal

IECA Domestic Gas Prices Up 35.6 Pct Since Approval of First LNG Export Terminal

There is no way of really knowing whether the U.S. Department of Energy’s approval of five applications to export LNG to non-free trade countries is having an impact on natural gas prices. The fact is that according to the Energy Information Administration, prices of natural gas have increased by 35.6 percent since August of 2012, when the first LNG export terminal was approved, says Industrial Energy Consumers of America group (IECA).

This means that for whatever reason, consumers are paying $25.8 billion more for their natural gas.


According to the EIA, the U.S. consumed 25,502,251 million cubic feet of gas in 2012, which means for every one cent increase per mcf, consumers pay about $255 million more. Since prices have risen $1.01 since the first LNG export terminal was approved, consumers could pay $25.8 billion more per year for natural gas, plus higher costs of natural gas-fired power generation.

Since DOE’s approval of LNG export terminals can be for periods up to 30 years, a lot can happen to domestic demand and supply that cannot be foreseen today. It is for this reason the DOE must take a cautious and balanced approach to approving new LNG export terminals and prevent price spikes.

Among other things, DOE is basing its LNG export decisions on domestic demand assumptions that are now three years old, and do not take into consideration that the EPA GHG rule will restrict use of coal in the power generation sector. The DOE is failing in its legal responsibility to do the quality of “public interest determination” that considers critically important factors that dictate what will happen to domestic prices. Among other things, OPEC indexed LNG prices should not dictate domestic natural gas prices.

Source: IECA, December 04, 2013