Price fixing

We're sure it will work this time.

The natural gas industry is experiencing a boom from shale and fracking.  Dow Chemical wants to keep gas prices low so it will have a cheap source of feedstock. "'Unchecked LNG export licensing can cause demand shocks, and the resulting price volatility can have substantial adverse impacts on U.S. manufacturing and competitiveness,' Mr. Liveris [of Dow] said in prepared testimony" before a Senate committee.  Translation:  If gas producers can sell overseas, the increased demand will raise prices, and I deserve to have them held artificially low.

It's encouraging to see that J. Bennett Johnston, a Louisiana Democrat with 24 years of experience on the U.S. Senate Energy Committee, completely grasps the principles of supply, demand, and pricing:
The free market might not always lead to everyone's definition of the sweet spot, but experience has shown that it is a better allocator and regulator than bureaucrats and politicians.  We should heed the admonition of Adam Smith that demand begets supply:  Allow the free market to allocate the nation's newfound energy bounty.
Unfortunately, he's been out of office since 1997.  The current batch of idiots will try anything to destroy the newly booming energy market, whether it's lunatic EPA regulations, price-fixing schemes, or squelching of pipelines.  Thank Heaven for the House.  For now.

1 comment:

David Foster said...

As the article notes, Mr Liveris better watch out...I'm sure there are a lot of companies that use HIS products as feedstocks, and would love to see export tariffs placed on them to keep their own prices low.

Regarding nat gas prices, I think the impact of even unconstrained exports will be limited due to the great costs of liquifying, transporting, and re-gasifying the gas. A US-based nat-nat-gas-using facility will be at a significant advantage compared with one at the other end of an ocean-transportation-based virtual pipeline.

I think the REAL factor which is likely to drive nat gas prices addition to the US industrial and increased home-heating the suppression of coal for electricity production and the substitution of nat gas as a turbine and/or boiler fuel in powerplants.