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Guest Author
Tyson Slocum

LNG exports hurt Americans. It’s time for the Biden admin to take action

The Department of Energy is supposed to assess whether it’s in the public’s interest to ship liquefied natural gas abroad, but the DOE is falling down on the job, argues Tyson Slocum.
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A large blue ship with the letters LNG on the side approaches a port
An LNG tanker. (Mark Garfinkel/Boston Herald/MediaNews Group/Boston Herald/Getty Images)

It’s hard to argue that shipping U.S. liquefied natural gas (LNG) overseas actually benefits the American public. But that hasn’t deterred the U.S. Department of Energy from repeatedly making this weak claim as it rubber-stamps approvals for new LNG-export applications.

It’s time for the Biden administration to change course. LNG exports are driving Americans’ home heating costs to record highs, and planned expansions of LNG-export infrastructure would put the U.S. on a path toward continued fossil-fuel extraction and surging greenhouse gas emissions. Biden’s DOE should take a sharp look at how LNG exports affect the American public. The findings will not be pretty.

Until 2016, the U.S. did not export any LNG. But the fracking boom over the last decade led to increased gas production, and gas companies seized the opportunity to get higher prices for that gas by shipping it abroad. In recent years, seven LNG export terminals have been constructed along the U.S. coastline, and more are in the works.

The executive branch of the federal government has the power to approve or deny LNG exports to most countries under the 1938 Natural Gas Act, which states that exports should be consistent with the public interest.” But the government has largely let gas companies call the shots.

The DOE’s most recent analysis of whether LNG exports are in the public interest was conducted under the Trump administration in 2018 — and it has aged poorly. It argued that the American populace benefits from LNG exports in part because some Americans own stock in LNG companies: households who hold shares in companies that own liquefaction plants receive additional income,” it noted, and that, combined with what it claimed are general benefits to society from LNG exports, means that these additional sources of income for U.S. consumers outweigh the income loss associated with higher energy prices.”

Since 2016, the DOE — under President Obama, then Trump and now Biden — has used this type of detached-from-reality reasoning to justify allowing LNG exports to increase substantially. In the first half of 2022, the U.S. became the world’s largest exporter of LNG, shipping about 20 percent of its gas production abroad.

This certainly benefits gas companies (and, yes, their shareholders) because gas commands higher prices on the international market than in the domestic market. But it’s become glaringly obvious that it does not benefit the average American household, given that nearly half of homes in the U.S. rely on gas heating and 38% of electricity in the U.S. is generated with gas.

My organization, Public Citizen, recently published a report that lays out how U.S. natural gas firms are making windfall profits from LNG exports while Americans are being hit with record-high heating costs.

But don’t just take our word for it. According to an October Federal Energy Regulatory Commission report, forecasts anticipate that continued growth in net exports, including from liquefied natural gas (LNG) export facilities, will place additional pressure on natural gas prices this winter.”

The Wall Street Journal reported on this same trend a year ago, noting that natural-gas exports are pushing domestic prices higher. […] Utilities from the Pacific Northwest to New England have filed regulatory requests to raise rates for natural gas this winter, citing a supply squeeze as a result of higher global demand.” And U.S. natural gas prices have risen still higher since then.

These high prices are causing significant economic hardship for tens of millions of American families. The National Energy Assistance Directors Association estimated in September that household heating costs this winter would be 34% higher than last winter for families with gas heat and 7% higher for those relying on electricity, much of which is produced from gas. Lower-income households will suffer the most; 26% of respondents to a U.S. Census Bureau survey taken in the summer of 2022 said they had forgone necessities like food or medicine to pay their energy bills at least once during the preceding year. The fact that some Americans own gas-company stock is cold comfort to the far higher number of struggling families that don’t.

The solution is for Biden’s DOE to undertake a rulemaking to assess the true impacts of LNG exports on all Americans. This should include an analysis of how higher home heating costs affect households at different income levels. It should also examine how exports affect gas supplies and prices in different geographic areas of the country, such as New England, which experts warn could face a gas shortage this winter. A comprehensive assessment should also consider the likely effects of proposed LNG-export facilities on nearby areas, which are primarily communities of color, considering that such facilities are both dangerous and polluting. Such an analysis could help the Biden administration live up to its commitment to environmental justice.

The Natural Gas Act calls for the federal government to take a hard look at LNG exports and clamp down on them if they’re harming Americans. The U.S. Supreme Court has determined that the primary aim” of the law was to protect consumers against exploitation at the hands of natural gas companies.”

Exploitation by gas companies is now evident — and not just of Americans, but of Europeans as well. Russia’s invasion of Ukraine has upended gas supplies to Europe. But while the U.S. gas industry likes to present itself as coming to the aid of our European allies by increasing exports to the continent, some of those allies have accused the U.S. gas industry of price gouging.

In the U.S. and across the rest of the world, the ultimate solution is to end reliance on natural gas, a volatile commodity, and shift to electrified heating systems powered by renewable energy. But that can’t happen overnight, so in the interim, the U.S. should curtail gas exports abroad to help keep heating affordable for Americans.

The Biden administration also needs to stop the buildout of new LNG-export facilities because it’s clearly at odds with the nation’s climate goals, which the president recently touted at the U.N. climate conference in Egypt. If the U.S. keeps growing its exports of LNG, by 2030 the industry could generate as much greenhouse gas emissions each year as up to 45 million gasoline-powered cars. Simply put, the U.S. will fail to meet its commitments to cut climate pollution if it continues building natural-gas infrastructure and ramping up LNG exports.

Tyson Slocum directs Public Citizen’s Energy Program, covering the regulation of petroleum, natural gas and power markets.