US LNG is becoming a zero-sum game
More American gas in Europe means more price pain for American consumers — and vice-versa
The US is on track to become the world’s biggest liquefied natural gas exporter, but the spoils of LNG market dominance are increasingly coming at the expense of US consumers via higher domestic prices. Integrating the American gas industry into fraught global energy markets is creating a price linkage that threatens to erode the competitiveness of natural gas in the US economy. Renewables stand to benefit, but tail risks abound.
Last month’s explosion at the Freeport LNG export plant in Texas has thrown into stark relief the trade-offs inherent in America’s pursuit of maximising liquefied natural gas exports. The blast on 8 June 2022 cut US LNG exports by approximately two billion cubic feet per day (Bcf/d), or ~20%.
Market reaction was as dramatic as the explosion itself. The month-ahead price of gas on Henry Hub crashed from a peak of $9.57 per million British thermal units (MMBtu) to $8.15/MMBtu within just a few hours. Why? Freeport’s outage made 2 Bcf/d of US shale gas unexpectedl…