Massive Increases in U.S Natural Gas Exports are Driving Up U.S. Energy Prices

[livingston]

Massive Increases in U.S Natural Gas Exports are Driving Up U.S. Energy Prices​

It is good to see at least one energy finance analyst at the Institute for Energy Economics and Financial Analysis, speaking commonsense. In an article by Clark Williams-Derry for Barron Magazine [SEE HERE], the author accurately outlines how significant U.S. Liquified Natural Gas (LNG) exports are driving up prices for American consumers.

The author accurately refutes the notion that exports do not drive-up domestic prices, by walking through the example of how natural gas prices dropped for U.S. consumers when the liquefied natural gas plant in Quintana, Texas [Freeport LNG] was temporarily shut down, blocking a portion of the export capacity. However, that facility is about to come back on-line and with increased exports from other facilities domestic U.S. prices have already doubled.
According to the U.S. Energy Information Association (IEA), U.S. storage of Liquified Natural Gas (LNG) is 12% below the five-year average (LINK). Additionally, the IEA is expecting the U.S. to export 11.7 billion cubic feet of LNG per day during the fourth quarter of 2022 — up 17% from the third quarter. The destination of that export is Europe.

Consider that 43% of U.S. households use LNG for home heating, and power suppliers use LNG to create electricity. With the massive 2022 exports of LNG to Europe (+17% in fourth quarter alone), that means lower domestic supplies and increased prices here in the United States for electricity and home heating. We are seeing and feeling these massive price increases right now.

Massive Increases in U.S Natural Gas Exports are Driving Up U.S. Energy Prices - The Last Refuge

It is good to see at least one energy finance analyst at the Institute for Energy Economics and Financial Analysis, speaking commonsense. In an article by Clark Williams-Derry for Barron Magazine [SEE HERE], the author accurately outlines how significant U.S. Liquified Natural Gas (LNG) exports...

theconservativetreehouse.com

 

[SonOfSun]

Quit whining. This is capitalism in action. If European countries will pay private American businesses more for the gas then American gas distribution and delivery companies will, that's just how it goes - they should sell to Europe, the businesses have a profit obligation to shareholders.

 

[SomeSoldier]

Meanwhile the US people see zero profit from selling our natural resources to foreign countries.

 

[prambo]

Seems like a good place to post this...

Europe Is Facing Energy Disaster And It's Going To Bleed Over Into The US - Alt-Market.us

 

[SonOfSun]

Meanwhile the US people see zero profit from selling our natural resources to foreign countries.

No. The 'people' will see the same profit as if it was sold to us. Natural resouce lease extraction payments are governed by law. Specifically:

Mineral Leasing Act of 1920 - Wikipedia

en.m.wikipedia.org

Relevant text;

Under the Mineral Leasing Act and later amendments, the right to produce federally owned petroleum (oil and natural gas) is secured for ten-year periods by competitive bidding, and goes to the party paying the highest bonus. There are three forms of payment to the government: bonus (an initial payment to the government), rental (an annual payment of $2 per acre), and royalty ( a payment of 1/8 or 12.5% of the gross value of the oil and gas produced)​

The gas and oil are extracted by private companies. These private companies sell it to the highest bidder. They then pay 12.5% of the gross sale price to the US govt. (On top of the fixed leasing fees). By selling to the highest bidder that 12.5% number goes up. If they could only sell the extracted gas and oil to companies that would use it in the USA, then the lease is worth less as it is an artificial limit on the potential buyers.

 

[Defilade]

 

[ronstar]

So the supply chain issues and Russia's invasion of Ukraine play no role in the crazy high prices?

 

[Defilade]

 

[spat]

It's a global market.

You could put some hefty export tarrifs on to balance it out, but there are a lot of reasons that would be a bad idea. Better to let the domestic prices rise.

 

[Saltwater60]

Quit whining. This is capitalism in action. If European countries will pay private American businesses more for the gas then American gas distribution and delivery companies will, that's just how it goes - they should sell to Europe, the businesses have a profit obligation to shareholders.

Pretty hard to feel bad when These assholes caused their own issues. Denmark is moving forward with shutting down a nuclear power plant at this very moment. Why would they do that?

 

[Saltwater60]

So the supply chain issues and Russia's invasion of Ukraine play no role in the crazy high prices?

Pretty tough to feel bad for them when they place arbitrary numbers on nuclear reactor lifespan and are refusing to go past the mark even with this occurring. Why would you shutdown reactors at this time?

Q&A: Why is Germany phasing out nuclear power - and why now? | Clean Energy Wire

www.cleanenergywire.org

 

[Beerman]

No. The 'people' will see the same profit as if it was sold to us. Natural resouce lease extraction payments are governed by law. Specifically:

Mineral Leasing Act of 1920 - Wikipedia

en.m.wikipedia.org

Relevant text;

Under the Mineral Leasing Act and later amendments, the right to produce federally owned petroleum (oil and natural gas) is secured for ten-year periods by competitive bidding, and goes to the party paying the highest bonus. There are three forms of payment to the government: bonus (an initial payment to the government), rental (an annual payment of $2 per acre), and royalty ( a payment of 1/8 or 12.5% of the gross value of the oil and gas produced)​

The gas and oil are extracted by private companies. These private companies sell it to the highest bidder. They then pay 12.5% of the gross sale price to the US govt. (On top of the fixed leasing fees). By selling to the highest bidder that 12.5% number goes up. If they could only sell the extracted gas and oil to companies that would use it in the USA, then the lease is worth less as it is an artificial limit on the potential buyers.

Ah, but keeping it here = cheaper gas AND rent/royalty money (even if less royalty) vs very expensive gas and slightly more royalty. On an individual domestic household’s finances, US natural gas exports don’t make neatly as much sense, corporate profits be damned.

 

[Saltwater60]

I just saw that the USA had the highest production of natural gas in its history and prices are dramatically rising??

The U.S. Becomes the World's Largest Oil and Natural Gas Producer

U.S. crude oil production increased by 17% in 2018, setting a new record of nearly 11.0 million barrels per day.

www.agriculture.com

US natural gas production hits 9-month high as NYMEX futures rally falters

US natural gas production is on a tear this month, trending at its highest since late 2021, as steady gains in drilling activity this year begin boosting domestic supply in a potentially chilling turn

www.spglobal.com

 

[SonOfSun]

Ah, but keeping it here = cheaper gas AND rent/royalty money (even if less royalty) vs very expensive gas and slightly more royalty. On an individual domestic household’s finances, US natural gas exports don’t make neatly as much sense, corporate profits be damned.

Replying to the bold part.... I get the feeling, but the law applies here. These leases for extraction are already penned agreements and there are legal requirements to honor those agreements. If the USA wants to change the law that stipulates future mineral extraction leasing costs and requirements they can, but as it stands now and for existing agreements that's how it is. At the end of the day as it this is up to private industry. They paid for the rights and they get to sell the products from those mineral leases as they see fit within the guidelines of the agreements... and the agreements don't contain any geographic or export restrictions/requirements. Cheaper gas for you isn't the goal of fossil fuel extraction companies, maximized profit for their shareholders is the goal. They would be negligent in their fiduciary duty, and thus be sued by shareholders if they chose to neglect that obligation to make you happy with cheaper gas.

 

[DoOver]

Jeepers one wonders if the leak of the Nord Stream 2 pipeline will have any effect on our collective prices??

 

[Beerman]

Jeepers one wonders if the leak of the Nord Stream 2 pipeline will have any effect on our collective prices??

Of course it will. It will cause the housing market to crash, Elon Musk to shut down Twitter, and candy corn factories to idle production for the rest of hurricane season.

 

[Beerman]

Replying to the bold part.... I get the feeling, but the law applies here. These leases for extraction are already penned agreements and there are legal requirements to honor those agreements. If the USA wants to change the law that stipulates future mineral extraction leasing costs and requirements they can, but as it stands now and for existing agreements that's how it is. At the end of the day as it this is up to private industry. They paid for the rights and they get to sell the products from those mineral leases as they see fit within the guidelines of the agreements... and the agreements don't contain any geographic or export restrictions/requirements. Cheaper gas for you isn't the goal of fossil fuel extraction companies, maximized profit for their shareholders is the goal. They would be negligent in their fiduciary duty, and thus be sued by shareholders if they chose to neglect that obligation to make you happy with cheaper gas.

Yeah, except I used a lot fewer words to say it.

 

[DoOver]

Of course it will. It will cause the housing market to crash, Elon Musk to shut down Twitter, and candy corn factories to idle production for the rest of hurricane season.

Golly this seems related somehow:

BREAKING

Former German special forces operative and radical environmentalist Sam Hyde is suspected to have sabotaged the Nord Stream pipeline. Interpol is currently looking for any information about his whereabouts. (CNN)

 

[Defilade]

 

[Jsmegs77]

Of course it will. It will cause the housing market to crash, Elon Musk to shut down Twitter, and candy corn factories to idle production for the rest of hurricane season.

Well, alright… I’m currently looking to buy a house so a crash in prices would help me. Twitter hitting the skids with or without Elon’s help is a net positive overall, but the candy corn? Won’t someone think of the children (and dental workers)?

 

[Saltwater60]

Well, alright… I’m currently looking to buy a house so a crash in prices would help me. Twitter hitting the skids with or without Elon’s help is a net positive overall, but the candy corn? Won’t someone think of the children (and dental workers)?

As long as you keep your job and the j retest rates drop. At 6-7% mortgage interest rate even a drop in prices won’t go well for you.

 

[Defilade]

View attachment energy.mp4

Bill Gates Slams Renewable Energy In Resurfaced Video

At the 2018 Stanford University Global Energy Forum, Chair Professor Arun Majumdar mentioned the growing optimism about renewable energy.

Gates: “That is so disappointing. I mean, really. Here’s Tokyo, 27 million people. You have three days of a cyclone basically every year. It’s 22 gigawatts rate over three days. You know, tell me what battery solution is going to sit there and provide that power?

"I mean, let’s not jerk around, you’re multiple orders of magnitude, oh a hundred dollars per Kilowatt hour, that’s nothing. That doesn’t solve the reliability problem. And remember electricity is twenty five percent of greenhouse gas emissions. Wherever we came up with this term green energy, I think it screwed up people’s minds, now they don’t understand.”

Well he sure has changed his tune now!

 

[Phazer]

Meanwhile the US people see zero profit from selling our natural resources to foreign countries.

Then, invest in the companies that are profitable.

We do not "share profits" here. Companies pay taxes. Investors take risks and get dividends. Consumers purchase products that they want and shun those that they do not want or cannot afford.

 

[Defilade]

 

[tirwin1]

It's a global market.

You could put some hefty export tarrifs on to balance it out, but there are a lot of reasons that would be a bad idea. Better to let the domestic prices rise.

I disagree. The president could make an executive order that prohibits exports. This would keep prices lower for this country.

We are essentially self sufficient in terms of energy. Our government should be following a strategy of "america first" particularly in the coming environment.

 

[Far king]

View attachment 175505

Bill Gates Slams Renewable Energy In Resurfaced Video

At the 2018 Stanford University Global Energy Forum, Chair Professor Arun Majumdar mentioned the growing optimism about renewable energy.

Gates: “That is so disappointing. I mean, really. Here’s Tokyo, 27 million people. You have three days of a cyclone basically every year. It’s 22 gigawatts rate over three days. You know, tell me what battery solution is going to sit there and provide that power?

"I mean, let’s not jerk around, you’re multiple orders of magnitude, oh a hundred dollars per Kilowatt hour, that’s nothing. That doesn’t solve the reliability problem. And remember electricity is twenty five percent of greenhouse gas emissions. Wherever we came up with this term green energy, I think it screwed up people’s minds, now they don’t understand.”

Well he sure has changed his tune now!

I’m sure the alphabet channels and cnn will run with this !
And California will be equipped to recharge some 1 1/2- 2 ,000,000 electric cars and trucks in 12 years?
C’mon man, be serious, are you on cocaine?

 

[Defilade]

Then, invest in the companies that are profitable.

We do not "share profits" here. Companies pay taxes. Investors take risks and get dividends. Consumers purchase products that they want and shun those that they do not want or cannot afford.

Unless those companies are receiving in some form TAXPAYER DOLLARS/Tax breaks...... then there is that.

 

[SonOfSun]

I disagree. The president could make an executive order that prohibits exports. This would keep prices lower for this country.

We are essentially self sufficient in terms of energy. Our government should be following a strategy of "america first" particularly in the coming environment.

He could do that... but should he... and can he? I know if I was the gas companies I'd challenge that in court for sure. Let's say you paid billions of dollars to lease the right to extract XYZ resources from those lands. When you paid that money and invested in equipment, labor, training etc. none of these restrictions were in place and aren't part of the lease contract. Your business model is you sell the extracted materials to the high bidder, like most things - that's why it was worth the price you paid. If you had fewer people to sell to maybe you wouldn't have paid as much for those rights? How is even remotely fair for the government to come in after the fact and try to put additional restrictions on them saying you can't export? If they wanted those restrictions it should have been part of the leasing agreement. Imagine if when buying a car, the dealer came back 2 years later and said, "the price of cars is up so we are going to need to charge you and extra $3000". Well, too bad Jack, that's not part of the contract so shove off.

Also, all curtailing demand does is lessen output. If there is no profit there is no incentive to produce.

 

[SomeSoldier]

Then, invest in the companies that are profitable.

We do not "share profits" here. Companies pay taxes. Investors take risks and get dividends. Consumers purchase products that they want and shun those that they do not want or cannot afford.

Leases from the government to companies to provide our country with natural resources for purchase is not the same and selling those resources to foreign countries to pay debts or increase wealth for the people handing out the permits.

China Is Reselling U.S. LNG To Europe For Big Profits | OilPrice.com

Due to weak demand in China, Chinese companies are reselling excess LNG from the United States to Europe for massive profits

oilprice.com

 

[spat]

I disagree. The president could make an executive order that prohibits exports. This would keep prices lower for this country.

We are essentially self sufficient in terms of energy. Our government should be following a strategy of "america first" particularly in the coming environment.

That would exceed the authority of a presidential executive order.

Executive orders are only orders go federal agencies. Private citizens and companies can ignore them.

Best he could do would be to order one of the agencies to make a rule that is within it's purview.

So, he could order increased tariffs, or tell the state department to designate oil some sort of strategic good and control export like it was night vision technology or something.

You can bet there would be lawsuits over the latter.


And it still wouldn't do any good. Now you're looking at massive retaliation from our trade partners. We won't allow any oil exported to Canada? Fine, then they'll triple the price of the lumber they semd us in that scenario.

So, we get to keep cheap oil, and everything else goes through the roof.

It would be our allies who get screwed, not our enemies. Russia, China, and the mideast can do fine on their own. It's western Europe that gets fucked in that scenerio.