Natural Gas Exports: Bad Idea? Part 4

| May 21, 2014 | 0 Comments

exporting natural gasLet’s pick up where we left off a few weeks ago.  In my last article on impending US natural gas exports, I explained why keeping the commodity here at home would be better for our country’s economy in the long run.

In case you missed it, let me quickly recap it for you…

As you’ve likely heard, export proponents suggest the process will provide a boon for the US economy by creating jobs and diminishing the US trade deficit.

While that may be true, I propose something different.

Let’s not export natural gas until we’ve fully developed the economic potential of the commodity here in the US.

For example, if we develop our transportation system to run off natural gas, we could eliminate a vast quantity of oil imports the US still relies on every day.  Doing so would reduce our trade deficit far more than exporting natural gas.

And that’s not all…

The US chemical industry is experiencing a renaissance thanks to the ongoing natural gas shale boom.  You see, natural gas is a feedstock for important products such as fertilizer and plastics.  With supplies of the commodity abundant and cheap, the US chemical industry is once again poised to become a global leader.

For instance, Dow Chemical (DOW) was relocating its chemical manufacturing factories to the Middle East five years ago.  But with low US natural gas pricing, the company is bringing them back. 

Dow Chemical is investing nearly $4 billion to build and reopen factories on the Texas and Louisiana coast.

The manufacturing revival is doing great things for the US economy…

According to the American Chemistry Council, the US logged a trade surplus of $800 million in chemicals in 2012.

That’s the first time that’s happened since 2001!

Of course, this resurgence is creating jobs.  Dow Chemical’s plans alone will create an estimated 500 manufacturing jobs and 5,000 construction jobs.

And that’s just the start of it…

Foreign companies are getting in on the action as well.  Russia, South Africa, and Taiwan all have plans to build new chemical factories in the US thanks to relatively low natural gas pricing.

But here’s the deal…

Prices won’t stay low if the US exports vast quantities of the commodity overseas.

There’s a lot of disagreement and misinformation over this issue.  But the fact is, natural gas prices will rise once the US starts exporting it overseas.

And once the price jumps, chemical manufacturers will not only lose a competitive advantage, but they’ll likely rethink their US expansion plans.

Listen folks…

I am all for helping out our overseas allies with our cheap and abundant natural gas.  But let’s wait until we can fully develop the economic potential of the commodity in the US before we do it.

In my opinion, we’re jumping the gun with US natural gas exports!

Until Next Time,

Justin Bennett

P.S.  Feel free to write in and voice your opinion on this extremely important issue.  You can reach me at [email protected].

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Category: Energy, Natural Gas

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.