The White House announced a freeze January 26 on liquified natural gas (LNG) exports to Asia and Europe. Has Biden accelerated his war on fossil fuels? Evidently, it’s to prevent climate change – or, for those progressive true believers who buy the administration’s spin, “the existential threat of our time.”
Biden Halts Natural Gas Exports
The Department of Energy will perform a comprehensive evaluation during the pause and update the guidance to authorize liquefied natural gas shipments. Officials plan to determine the environmental and economic effects of LNG exports, an initiative that will take months to complete. The administration will then start accepting feedback from the public. The last time this type of assessment occurred was in 2018.
Jennifer Granholm (Photo by Mark Makela/Getty Images)
Allies should not be concerned because there will be exemptions and exceptions for immediate national security emergencies and unanticipated events, noted Energy Secretary Jennifer Granholm. Meanwhile, President Biden stated that his administration would “turn crisis into opportunity” for America while also targeting the GOP.
“During this period, we will take a hard look at the impacts of LNG exports on energy costs, America’s energy security, and our environment. This pause on new LNG approvals sees the climate crisis for what it is: the existential threat of our time,” President Biden said in a statement. “While MAGA Republicans willfully deny the urgency of the climate crisis, condemning the American people to a dangerous future, my Administration will not be complacent. We will not cede to special interests.”
Climate change activists celebrated the move, calling it a bold step to confronting global warming. For the past year, there has been a barrage of demands from environmental groups that the administration rein in natural gas. Ben Jealous, head of the Sierra Club, stated that this move “continues this administration’s historic efforts to meet the global commitment to phase out fossil fuels and confront the climate crisis head on.”
However, various US industries cautioned that these measures could raise the risk of higher fuel prices, threaten energy stability and reliability, and harm employment. American Petroleum Institute (API) CEO Mike Sommers described the announcement as “a win for Russia and a loss for American allies, U.S. jobs, and global climate promise.” He added: “There is no review needed to understand the clear benefits of U.S. LNG for stabilizing global energy markets, supporting thousands of American jobs and reducing emissions around the world by transitioning countries toward cleaner fuels.”
War on Fossil Fuels
Secretary Granholm appeared on several media outlets after the announcement. This included a stop on CNBC, where she was asked if this was about President Biden’s 2020 campaign promise to put fossil fuels out of business. Her response? “I did not hear him say that. I think the president recognizes, as we all do, that there needs to be a managed transition that fossil fuels are not going away in the immediate.”
Joe Biden (Photo by Anna Moneymaker/Getty Images)
Throughout the previous presidential campaign, Biden repeatedly told reporters and voters that he would put the fossil industry out of business. “I guarantee you we’re going to end fossil fuel,” he said at an event. When asked at another meeting with voters if he wanted to ban fracking and halt pipeline infrastructure, he emphatically said, “Yes!” In his final debate with then-President Donald Trump, Biden dropped a bombshell on the energy industry: “I would transition away from the oil industry, yes. The oil industry pollutes significantly. It has to be replaced by renewable energy over time. Over time.”
Of course, the current administration has tried to have its crude and consume it, too. In recent weeks, oil production reached record highs of as much as 13.3 million barrels per day, although output recently cratered to four-month lows. According to Baker Hughes data, volumes were expected to slow as the number of active drilling rigs has fallen. Plus, the nation’s emergency stockpile, the Strategic Petroleum Reserve (SPR), has plummeted by about 40% as President Biden attempted to exploit these supplies to lower energy costs heading into the midterm election.
What About Prices?
The good news is that if LNG exports came to a screeching halt, it could lead to a short-term drop in prices. In late 2022, export facility Freeport was knocked offline due to a devastating fire. Because US natural gas production has been around 100 billion cubic feet per day, more of this supply was kept home rather than shipped overseas. It ignited a sharp selloff in natural gas prices that had been trading in the $8 to $10 range and are now slightly above $2 per million British thermal units (Btu). So, placing an artificial cap on demand would suppress price growth.
The bad news is this would threaten the country’s energy dominance and lead to job losses because there would be fewer natural gas projects and export terminals at a time when China is expanding its own LNG base. Additionally, output might slow due to depressed prices and consumption. The US recently experienced the third-largest drawdown of domestic inventories of natural gas in history. This did not launch a substantial rally but rather a slight drop in prices because stockpiles are still above the five-year historical average. However, households would be at a considerable disadvantage if production volumes slide and domestic demand surges on record-breaking cold or heat. Should this happen, millions of people would need to pray to the heavens, hoping that windmills follow through on the billions in taxpayer subsidies.
