The No.1 Chemical Maker In The US, Dow Chemical (DOW), Supports Exports Of LNG But Advises Caution

 @David_Kashi on July 31 2013 9:21 AM

Dow Chemical Company (NYSE:DOW), the nation's largest chemical maker, said the firm supports liquified natural gas exports to U.S. free trade partners but cautioned that a prudent approach is necessary to avoid volatility in prices that could hurt U.S. manufacturers.

“For the first time in more than a decade we’re seeing natural gas prices at affordable and stable levels which are fueling this resurgence in manufacturing across the country,” Peter Gudritz, a Dow company spokesman, said in an interview with rigzone.com. “Overall, given the difficulty of reversing any sort of missteps, we need to take a cautious, balanced approach and understand as many of the ramifications of a decision that the U.S. is making before we move forward.”

Energy giants such as the Exxon Mobil Corp. (NYSE:XOM) are looking to raise the price of natural gas by pushing the government to allow them to export to more countries.

This concerns manufacturers, like Dow, which warn that such an export-heavy policy will result in higher energy prices in the U.S. and hurt manufacturing. Energy companies have been urging the U.S. Department of Energy to let them export their gas to nations with which the U.S. does not have free trade agreements, something only the energy department can permit, provided it determines that such ventures are consistent with the “public interest,” as required by the Natural Gas Act.

Currently 17 applications for multibillion-dollar facilities to turn the commodity into liquefied natural gas, or LNG, for export are under review by the Energy Department.

Gudritz therefore warned that the U.S. needs a comprehensive energy policy that will help revitalize American manufacturing and create jobs.

“Now we actually have that unique opportunity to re-stage how we talk about and how we view energy in the United States, and it’s a chance we haven’t had for decades,” Gudritz said. “So if we let a focus on only the short-term side of decisions on exports, we’re likely to squander this opportunity and bring back price volatility. We want to be as thoughtful and cautions about this as we can.”

Back in February the CEO of Dow, Andrew N. Liveris, told a U.S. Senate committee that unrestricted LNG exports could kill the “renaissance” in America’s manufacturing sector.

“If we shipped half or more of [natural-gas production] overseas today as some propose, it will have severe unintended consequences,” Liveris said. “It would actually mean higher gas and electricity prices. It will actually mean higher transportation and utility costs for consumers as well as industry. These higher and more volatile energy prices will also cause domestic manufacturers to once again ship operations and ship jobs, to ship factories overseas to countries where natural gas is cheaper. And there are countries where natural gas is cheaper. America would sacrifice this once-in-a-generation competitive advantage.”

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