Biden pressured to restrict LNG exports

WASHINGTON — Pressure is building on President Joe Biden to restrict exports of liquefied natural gas after a recent price spike in domestic gas prices.

Ten senators from the Northeast and Midwest, all Democrats or independent, wrote to the White House Wednesday to ask Biden to halt approval of new LNG facilities until a plan is developed to "ensure natural gas remains affordable for American households" as the administration looks to increase LNG exports to Europe amid increasing tension with Russia.

The U.S. gas benchmark Henry Hub closed Friday at $5.69 per million British thermal units, 38 percent higher than the previous week, amid intense trading and a winter storm sweeping the central United States. Natural gas closed at $4.89 Thursday, down 61 cents, or 11 percent. .

"When establishing U.S. LNG export policies, we understand there are geopolitical factors and global and regional markets to consider," the senators wrote. "However, the administration must also consider the potential increase in cost to American families because of higher export volumes."

The U.S. Department of Energy projects that American LNG exports will reach 11.5 billion cubic feet per day this year, making the United States the world's largest LNG exporter ahead of Qatar and Australia.

The surge in development along the Texas and Louisiana Gulf Coast has been a boon for natural gas producers, allowing access to markets outside North America where gas sells at a premium. In Europe gas prices have averaged almost $28 per million British thermal units since the beginning of the year, compared with average prices of $4.38 for the U.S. benchmark.

While low compared to Europe and Asia, domestic prices have risen 50 percent over the past 12 months. Oil and gas producers have argued against a connection with rising LNG exports, blaming Northeast governors' opposition to the construction of new gas pipelines.

"Delays and cancellations of critical energy infrastructure have deprived people in the Northeast of access to lower-cost natural gas from nearby producing regions," Anne Bradbury, CEO of the trade group American Production and Exchange Council, said in a statement. "Instead, their LNG is delivered from Trinidad or Russia, which means they pay even a higher premium when colder than normal weather happens.”

U.S. manufacturers have long pushed back against increasing U.S. LNG exports, arguing that the competition with buyers abroad would drive up domestic prices.

The trade group Industrial Energy Consumers of America wrote to Energy Secretary Jennifer Granholm in November asking the administration to create a “safety valve” that would limit LNG shipments when domestic gas prices rise and arguing that “exports must be limited to surplus supply of natural gas.”

On Wednesday, the group called on the Commodity Futures Trading Commission to investigate last week's price spike, claiming it would cost U.S. gas consumers $6.2 billion.

"The key question is who financially benefited from the increase and how can the CFTC prevent it from happening again," IECA President Paul Cicio said in a statement.

The letter to Biden Wednesday was signed by Democratic Sens. Jack Reed and Sheldon Whitehouse of Rhode Island, Elizabeth Warren and Ed Markey of Massachusetts, Debbie Stabenow and Gary Peters of Michigan, Tina Smith of Minnesota, Richard Blumenthal of Connecticut, and Patrick Leahy of Vermont. Sen. Angus King, the Maine independent, also signed. james.osborne@ chron.com