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July 11, 2019

King Sounds Alarm on Potential Price Hikes on Natural Gas: Congress Cannot Repeal the Law of Supply and Demand

WASHINGTON, D.C. – Today, U.S. Senator Angus King (I-Maine) pushed witnesses before the Energy & Natural Resources Committee to address the adverse impacts that increased liquid natural gas (LNG) exports could have on American energy costs.  Possible price increases due to market dynamics would likely impact New England disproportionately, because of its reliance on LNG for an oversized share of its energy needs.

“Australia’s natural gas has a vast capacity – they started exporting it in a big way about ten years ago,” Senator King reminded the expert panel. “Their prices doubled for their [natural gas] consumers between 2015 and 2018. The one law that this Congress cannot repeal is the law of supply and demand. And the number of LNG terminal applications now approaches 50% or 60% of the total production in this country, and you’re telling me it’s not going to affect domestic prices? That doesn’t pass the straight face test. You cannot argue that a dramatic increase in demand caused by LNG exports is not going affect domestic prices...”

“For the Department of Energy to continue issuing these permits, which, under the law, are supposed to take into consideration the public interest, without even doing, as I understand it, a recent study of what the elasticity of demand is and what the effect of prices, I think is utterly irresponsible. I’m not opposed to all exports of natural gas – all I want is some analysis of what the effect would be on domestic prices, and not warm, fuzzy assurances,” Senator King continued. “The bottom line is: you cannot tell me we’re going to drastically increase demand for a product and its price to the local consumers is not going to increase. And if we get to a place where natural gas prices are internationally set as a commodity like oil, we’re sunk. Natural gas prices in this country right now are one of our major competitive advantages, if not our most major competitive advantages in terms of our industry, in terms of our consumers. To give that away to any country in the world, just strikes me as totally outside the idea of what is in the public interest.”

Senator King has repeatedly spoken out against increasing exports of LNG when more natural gas is desperately needed in Maine and across New England to help lower energy prices. Last June, Senator King pushed leaders of the Federal Energy Regulatory Commission (FERC) to ensure that any exports of liquid natural gas (LNG) would not hurt people or businesses across Maine by jeopardizing America’s competitive advantage and driving up energy prices.

In 2017, Senator King introduced the Natural Consumer Gas Protection Act, which would require the Department of Energy (DOE) to consider the effect that any natural gas export proposal would have on domestic prices and employment, regional impacts, and any impact on U.S. industrial competitiveness. In 2015, he introduced the Domestic Energy Security Protection Act and the Regional Gas Consumer Protection Act, bills which aimed to prevent America from giving away one of its sole economic advantages – lower energy prices – to international competitors when it could benefit the country. He has also joined with his colleagues to push the Department of Energy to see that it considers the impact on families and manufacturing before approving LNG export applications.

Today’s hearing featured witness testimony from Steven Winberg, Assistant Secretary for Fossil Energy, Department of Energy; Dennis Arriola, Executive Vice President and Group President, Sempra Energy; Melanie Hart, Senior Fellow and Director of the China Program, Center for American Progress; Charlie Riedl, Executive Director, Center for LNG; Nikos Tsafos, Senior Fellow, Center for Strategic & International Studies. 

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