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Liveris presses US Senate for a restrained, incremental approach to exports

4:30 PM MST | February 18, 2013 | —Clay Boswell

Dow chairman and CEO Andrew Liveris went before the US Senate Committee on Energy and Natural Resources last week to make the case for limiting US exports of natural gas. The question before Congress, he said, was not whether to uphold the ideals of free trade, but how to maximize the benefit of what he called “America’s natural gas bounty” for all stakeholders.

The issue is “nothing less than energy security and energy independence, and jobs for Americans,” Liveris said.

Low natural gas prices have, he explained, “powered a manufacturing resurgence in America—a manufacturing renaissance that could, in time, become a manufacturing revolution.” Shale-based natural gas is therefore no simple commodity, but rather “a treasure … a once-in-a-generation opportunity to make an America that exports high-value added finished products, not just Btu.”

Last month, Dow quit the National Association of Manufacturers over the issue and threatened to leave the ACC. In December, Dow was critical when a study commissioned by the US Department of Energy (DOE) concludes that exports of liquefied natural gas would provide a net economic benefit under practically any set of conditions. “In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports,” the study reports.

In his statement, Liveris directly contradicted that finding. “All told, when natural gas is not sold as an export or burned for energy—when it is used, instead, as the building block of manufactured goods—it creates eight times more value across our nation’s economy,” he said.

The issue is not free trade, said Liveris, because there is no global free market for natural gas. “The fact is if we shipped half or more of our natural gas offshore, it would have severe unintended consequences for US prices,” he said.

US energy prices would rise, he continued, and US manufacturing jobs would again migrate to countries where natural gas prices are manipulated as a matter of policy. Liveris singled out Saudi Arabia: “Here you have the world’s largest exporter, which sits on more oil than any other nation, and they are choosing to deploy their gas as a tool with which to fuel and grow their manufacturing sector.” The US would also lose its “huge competitive advantage because gas is not an openly traded commodity and, therefore, does not have a world price or world market,” Liveris said. In Europe and Asia, he explained, natural gas prices are indexed to oil prices and, consequently, five times more expensive than US prices. “And we all know who sets the world oil price,” he added. “Anyone would be hard-pressed to call this market rules-based, fair, or free.”

If all stakeholders affected by DOE’s decisions have a voice in informing them and the agency moves cautiously and incrementally, everyone—energy producers; manufacturers; consumers—can benefit, said Liveris.

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