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September 27, 2022 · 1 min read

LNG exports drive up US domestic natural gas prices

Tom KirkmanIndependent Project Manager

U.S. surge of exports of LNG to overseas is driving up U.S. domestic prices of natural gas, by creating an artificial domestic reduction in inventories.

Not rocket science, folks.

===============

“In 2015, U.S. LNG exports were equal to about 0.01% of U.S. production. By 2019, that had risen to 5.1%.

By 2019 it had grown to 10%, and it will be even higher this year.

● That is a significant amount of incremental demand added in a short period of time.

LNG exports are small compared to what we use for electricity production at 3.3 Tcf.

However, as one Twitter used correctly noted “Marginally this is a huge increase.”

Indeed, over the same time period of 2015 to 2021, natural gas that went into electricity production only increased by 1.7 Tcf (Source).

● So, at present LNG is the fastest-growing outlet for U.S. natural gas production (although pipeline exports to Mexico have also soared in recent years).

… To summarize the four points, this is largely why natural gas prices quadrupled in two years:

1) Natural gas exports are growing rapidly

2) The LNG market is being influenced by soaring prices in Europe

3) Strong natural gas demand has pulled natural gas inventories to a relatively low level

4) Fear often causes the oil and gas markets to overshoot”

forbes.com ↗

Read the linked article on forbes.com ↗

FROM THE THREAD

Tom's notes 3

  1. Tom Kirkman

    Armando Cavanha both Trump and Biden wanted to change EU's natural gas dependency from importing Russian natural gas via pipeline to importing U.S. LNG via shipping overseas.

    My views going back almost 10 years is ... why not both?

    Why can't the EU import both cheap, piped natural gas from Russia, as well as more expensive LNG from U.S. and elsewhere as a backup option?

    I remember explaining this at length years ago, both on the old Oilpro forum and again later, on the Oil Price forum.

    ● Why does this natural gas situation need to be a zero sum game?

    ● Zero Sum is causing economic havoc and energy havoc globally.

  2. Tom Kirkman

    Thanks Armando Cavanha. Never understood what is so difficult to understand the benefits of voluntary energy source diversification.

    Why not import *both* piped natural gas along with shipped LNG, from different nat gas producers?

    Just seems logical to me.

  3. Tom Kirkman

    Ali Ugur Nogay unfortunately, the U.S. increasing its exports of LNG will have an impact of higher domestic prices of natural gas for U.S. consumers, as nat gas inventories get depleted.

    While U.S. exports of LNG might be good business for Cheniere et al, it doesn't really help U.S. consumers.

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