Manufacturers go to war with oil industry over gas exports

The petroleum industry and several big manufacturing companies are warring over whether U.S. regulators should allow a major expansion of liquefied natural-gas exports.

Dow Chemical, Eastman Chemical, Alcoa and others have launched a coalition called “America’s Energy Advantage” to warn against “unfettered” exports, alleging it would harm U.S. manufacturing growth and cost jobs.

The new coalition is calling on the Energy Department to “disregard” a federally commissioned consultant’s recent study that said exporting gas will be a net economic win for the nation, calling it inaccurate.

Energy-thirsty manufacturers have welcomed the U.S. gas production boom and low costs, and fear price spikes if the Energy Department approves a slew of pending applications to export gas from the Gulf Coast, Oregon and elsewhere.

{mosads}The coalition drew a strong rebuke Thursday from the American Petroleum Institute, a powerful lobbying group that represens oil and natural-gas companies.

“Short-sighted efforts by a few industrial users to restrict exports in an apparent attempt to control prices would deprive American families of the wider benefits of lower costs and increased job creation,” said API President Jack Gerard in a statement.

“Restricting exports of energy as a ‘strategic resource’ makes no more sense than unnecessarily restricting the export of chemicals, agriculture products or cars, and such a backward move  could violate international trade rules,” he said.

The public jousting between big industries is just one front in growing political and lobbying battles over gas exports.

A pair of senior Democrats, Sen. Ron Wyden (D-Ore.) and Rep. Edward Markey (D-Mass.), are also warning that the exports could harm consumers and domestic manufacturing.

In the near term, the lawmakers and the new coalition are both attacking the DOE-commissioned report, which concluded that exports would put some upward pressure on prices but won’t pose a major threat to domestic industries.

America’s Energy Advantage has launched an online petition drive with messages to DOE alleging the study underestimates the effect that exports would have.

It “fails to recognize the significant increase in demand from manufacturing that is a direct result of more affordable natural gas supplies,” the petition states.

The other members of the new coalition are the chemical company Celanese, steel giant Nucor and the American Public Gas Association, which represents publicly owned local gas utilities.

The group says federal officials should “move cautiously on permitting natural gas exports in order to measure impact on price, security and jobs.”

DOE is weighing over a dozen applications to export more than 22 billion cubic feet of per day to nations that don’t have free-trade agreements with the U.S., and has said the study unveiled last month will help inform its reviews.



Federal law, according to DOE, generally requires approval of exports to nations that have the deals with the U.S., but other applications face more scrutiny.

While there are divides over exports among industries, the powerful U.S. Chamber of Commerce favors sending U.S. gas abroad, Chamber CEO Tom Donohue said in his annual “state of American business” address Thursday.

But Wyden, the chairman of the Senate Energy and Natural Resources Committee, urged Energy Secretary Steven Chu to redo the study in a letter Thursday.

He said the study, conducted by NERA Economic Consulting, did not properly account for natural-gas demand.

— Zack Colman contributed to this report.

This post was updated at 5:49 p.m.