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LNG exports may incite price increases for US users

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LNG Industry,

According to the latest Bloomberg report, environmental groups opposed to US natural gas exports just found an unlikely ally: The Commodity Futures Trading Commission.

The government agency that regulates futures and options markets found that shipping gas overseas could raise costs for Americans. Domestic prices could rise as much as 20% due to the burgeoning industry that liquefies gas so it can be shipped around the world on tankers, according to a CFTC report.

In its study, the CFTC cited other assessments conducted by the American Petroleum Institute, the US Energy Department and Deloitte LLP.

The US shale boom has bloated domestic gas supplies and ushered in a new era of American energy exports. President Donald Trump has encouraged the development of more LNG plants, while groups such as the Industrial Energy Consumers of America have panned exports as a drain on the nation’s resources.

“Estimates of US LNG export levels and price impacts on domestic markets vary widely, but generally these estimates suggest that there is a potential for US domestic natural gas markets to be influenced by global supply-demand factors,” the commission said in the report.

An industry trade group disagreed.

“We expect a marginal impact” because increased demand will be fulfilled by new production, Charlie Riedl, executive director of the Centre for Liquefied Natural Gas, said. “As the CFTC analysis makes clear, improved production technologies continue to reduce forecasted prices for natural gas.”

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