Lawmaker Calls on Energy Department to Hold All Pending Applications for Export of Fuel; Announces Intent to Introduce Legislation Keeping Natural Gas Here in America

WASHINGTON (January 19, 2012) – This morning, the Energy Department’s Energy Information Administration (EIA) released a sobering report analyzing the potential impact of natural gas exports on domestic natural gas prices. The report found that if the total potential exports of American natural gas from eight proposed terminals were realized and sent to foreign markets, domestic natural gas prices could rise more than 50 percent.

Rep. Ed Markey, the (D-Mass.), the Ranking Member of the Natural Resources Committee and a senior member of the Energy and Commerce Committee, today called on the Department of Energy to stop the certification of any more export permits before all impacts on American families and businesses are considered. Rep. Markey also announced his intent to introduce legislation that would keep more American-made natural gas in America.

“Today is a wake-up call to American consumers and businesses who rely on natural gas that higher prices are on the horizon if we don’t keep our natural gas here in America,” said Rep. Markey. “The affordable domestic supplies we’ve recently developed could soon become a thing of the past if companies are allowed to export large volumes of American natural gas supplies to foreign countries.”

The EIA report found that with expected exports of 12 billion cubic feet of natural gas per day (bcf/day)—the amount of capacity companies have already applied to export—domestic natural gas prices could rise around 24 to 57 percent above baseline levels, depending on how quickly exports are ramped up and assumptions regarding the U.S. shale gas resource base.

The recent shale gas boom has led to the highest level of domestic natural gas production in U.S. history. The Department of Energy has already approved one application to export 2.2 bcf/day of natural gas and is now reviewing applications for seven more facilities. If all eight projects go forward, the total amount exported would equal about 18 percent of the natural gas currently consumed in the United States, according to analysis of data provided by DOE to the Democratic staff of the House Natural Resources Committee.

Earlier this month, Rep. Markey sent a letter to Energy Secretary Steven Chu expressing concern about the impact of natural gas exports on American consumers and businesses and questioned the Energy Secretary about his department’s review of natural gas export applications. That letter can be found here.

Higher natural gas prices will not only hit consumers directly on their utility bills, it will increase the cost of fertilizers, plastics, chemicals and other everyday goods that use natural gas as a feedstock,” continued Rep. Markey. “America’s economic competitiveness, energy security, and environmental well-being must be higher priorities than the bottom lines of natural gas companies. I understand the Department of Energy will now be developing a more comprehensive economic analysis using today’s report as a primary input. The Department of Energy must certify no more export permits until, at a minimum, Americans are able to digest the findings of that upcoming report.”

The report also found:

  • Around 30-40 percent of natural gas exports would come from reduced domestic consumption, not from increased production. Higher prices will lead directly to substantial demand destruction domestically.
  •  Use of natural gas in the power sector would fall substantially as a result of exporting. Coal-fired generation would rise to make up for the majority of lost natural gas-fired generation.
  • The role of hydraulic fracturing, or “fracking,” would expand dramatically under an export scenario since about three-quarters of the increased natural gas production needed to satisfy export demand would come from shale sources. 

Today’s report will be used as an input into a more comprehensive Department of Energy analysis that will incorporate additional variables. That study is scheduled to be released in the first quarter of this year.
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