Stupid Inflation Tricks, Round 2

An energy executive instructs Sen. Warren on natural gas prices and CO2 emissions

WSJ editorial.

"Progressives want Americans to believe that inflation always and everywhere is the result of corporate greed rather than their policies. Behold how they are trying to blame rising energy prices on U.S. oil and gas producers.

Two days before Thanksgiving, Elizabeth Warren sent a letter berating major U.S. oil and gas producers for restraining production, increasing exports, and “putting their massive profits, share prices and dividends for investors, and millions of dollars in CEO pay and bonuses” ahead of Americans. The Massachusetts Senator added: “These record-setting natural gas exports are leading to higher prices for consumers, and they show no signs of a slowdown.”

EQT Corp. CEO Toby Rice on Monday replied to Ms. Warren in a corker of a letter that deserves wider circulation. Although not on the American left’s most-wanted list, at least not yet, EQT is the largest U.S. natural gas producer and has an enormous footprint in the Appalachian shale basin.

Mr. Rice notes that the average price of natural gas for 2021 ($4.80 per mcf or thousand cubic feet) is significantly below the 20-year average of $5.70 mcf. Between 2005 and 2008, before the U.S. shale drilling boom for natural gas, prices roughly ranged between $6 and $13 mcf. (See the nearby chart.) “Yes, the price of natural gas has increased rapidly relative to 2020 as the economic engines of the world have reignited, but natural gas prices in 2020 were the lowest in over two decades, a year during which we exported LNG,” he writes.

U.S. LNG exports have been increasing rapidly since 2015 and doubled in the last two years due to rising global demand for the fuel to replace coal. But LNG exports still account for only about 10% of U.S. production. Prices are lower than during most of President Obama’s first term when LNG exports were basically nonexistent.  

Exports have encouraged more production, which has helped keep prices low for Americans. Lower gas prices have filtered through to consumers in lower electricity rates and have offset the steep cost of integrating solar and wind into the electricity grid. Americans would be paying much more for electricity today without the past decade’s boom in shale hydraulic fracturing.

LNG exports are also reducing global CO2 emissions. Mr. Rice calculates that switching from coal to gas power in the U.S. has reduced CO2 emissions by the equivalent of electrifying 190 million cars, or roughly 70% of the total number of cars in the U.S. Unlike electric vehicles, natural gas doesn’t require hundreds of billions of dollars in government subsidies.

“The United States has a vast amount of natural gas, more than any other country in the world,” Mr. Rice concludes. “To best address climate change, it is incumbent on countries like the United States to produce more natural gas that can be used by other countries.” If the U.S. doesn’t, Vladimir Putin has made clear that Russia will, increasing his energy leverage over Europe.

Natural gas prices have increased this year because supply hasn’t kept up with demand. The Democratic tax-and-regulatory onslaught on fossil fuels and pressure from progressive investors have persuaded some producers to restrain output and return profits to shareholders rather than invest in expanding supply.

The Biden Administration this week has been pointing to a recent dip in energy prices triggered by the Omicron Covid variant and a milder winter weather forecast. Democrats want to take credit for falling prices that have nothing to do with their policies while ducking political responsibility for price increases that their policies lead to. Credit Mr. Rice and EQT for setting the record straight."