Masks at the Ready: There's a Gas War Brewing

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

It's time for all would-be prognosticators, including yours truly, to begin advancing their predictions about what 2013 might have in store for us.

For my money, I'm willing to predict that the year will result in an increased taking of sides in the U.S. regarding the desirability of domestic natural gas being cooled until it becomes liquefied and shipped to the likes of Europe or Japan. We may not have a definitive decision on the subject by the end of next year -- after all, exporting gas will require government approval, and if TransCanada's (NYSE: TRP  ) effort to gain a go-ahead for its Keystone XL pipeline project is any indication, there may still be no clarity even at the close of 2014 -- but the pro- and anti-exporting rosters likely will become significantly more obvious.

The stakes were raised on the subject, and the cacophony from those for and "agin" exporting was also increased two weeks ago, when the results of a government sponsored study on the likely U.S. economic effects of LNG exports was released. Those results were generally favorable to the sharing of our vast new supplies of natural gas. Simplistically, it now appears that, as you might have expected, those pushing for the processing and shipping of LNG include natural gas producers like ExxonMobil (NYSE: XOM  ) and Chesapeake (NYSE: CHK  ) , organized labor, and possibly the federal government.

The ayes
Those wanting to confine our new treasure-trove of natural gas to our own shores include -- surprise, surprise -- environmental groups and manufacturers like Dow Chemical (NYSE: DOW  ) , for which natural gas is a feedstock for a host of its end-products. Obviously, with gas prices about five times higher in Europe and Japan than in North America, Dow CEO Andrew Liveris seeks to guard against the possibility that sharing our gas would elevate his company's costs at home.

The Wall Street Journal's coverage of the subject provides intriguing insight on the unpredictability of how the Obama administration is apt to ultimately come down on the subject. Upon release of the report, which was prepared by NERA Economic Consulting, a Washington, D.C., arm of Marsh & McLennan (NYSE: MMC  ) , the paper noted: "For President Barak Obama, gas exports could play into his embrace of rising U.S. production and help achieve foreign-policy goals."

I believe It's factual and not political to note that the president's "embrace of U.S. production" is all too often indiscernible. Indeed, it took only three days following the November national election for the administration to zap 1.6 million acres of federal land in the West that had been targeted for oil shale development. My next query then becomes one of the specific foreign policy goals to which the writer was referring.

Same Journal, different take
In fact, four days after the original article on the release of the report, that same Journal's columnist, Mary Anastasia O'Grady, observed: "Since becoming president, Mr. Obama has treated hydrocarbon production like an infectious disease to be eradicated. His administration had to commission a study to learn ...that allowing American companies to export (LNG) would be beneficial to the U.S. economy."

O'Grady concluded her column by saying:

Greater North American energy supplies imply millions of new jobs, higher tax revenues, plentiful energy for continental manufacturing and the end of reliance on hostile producers like Venezuela. But to reach optimum potential, investors need the freedom to explore (for), exploit and refine hydrocarbons and move output at every stage of production throughout the continent. In other words, governments need to get out of the way.

As to environmental groups, I consider myself to be at one with them. Indeed, I'm offended -- as is most everyone I know -- by the harming of a single blade of grass on our fabulous planet. There is, however, something to be said for keeping tabs on reality and logic. That objective clearly wasn't met by a Sierra Club spokesperson who recently advocated "jumping over natural gas and ushering in renewable energy."

Let's not get ahead of ourselves
In the final analysis, everyone's entitled to an opinion -- hopefully even yours truly -- on what is almost certain to become a progressively more contentious subject next year and beyond. For what it's worth, I'm inclined to lean toward the arguments of Dow's Liveris and energy seer T. Boone Pickens, who, almost alone among those from the energy industry, opposes shipping our gas overseas at the first opportunity.

Boone's notion -- I can call him that, since I've met him -- is that our natural gas should be kept at home. He believes the country will benefit by its use in, for instance, fueling cars and trucks, thereby fostering U.S. energy independence, while reducing gasoline-related emissions.

That seems like a logical approach, at least until we know how much surplus gas we'll have once we've fed newly constituted fleets of vehicles. And by extension, we'll then also have a handle on the number of new jobs that will be created by the additional chemical and petrochemical plants that Dow, Royal Dutch Shell (NYSE: RDS-B  ) , and others are constructing on the basis of low-priced gas.

I suppose that puts me in the same camp as the Sierra Club for now. Will wonders ever cease?

One potential company that could benefit from keeping U.S. nat-gas at home is T. Boone Pickens' own Clean Energy Fuels, which focuses its natural gas efforts primarily on trucking and fleets. It's poised to make a big impact on an essential industry. Read all about Clean Energy Fuels in our brand-new report. Just click here to get started.

Read/Post Comments (1) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 22, 2012, at 3:41 PM, BCM999 wrote:

    Following your logic we should bar U.S. automakers from exporting cars because it will reduce their price for American consumers. I don't think so. What other products should we ban the export of? Oranges from FL in order to make orange juice less expensive for Floridians? Plus, each time someone says that "we should keep our gas here," they are largely talking about somebody else's property. Unless the gas is produced from government owned land, the gas belongs to either the landowner or someone who has purchased the mineral rights. By saying that "we should keep our gas here" you are saying that the owner of the property should ignore a global marketplace for his product and instead sell it for less to U.S. consumers only. How is that not a government taking and any different that imposing eminent domain in order to take someone's private property for the good of the rest of the citizenry. At least in those instances the government must pay fair market value for what it is taking away from the proper owner.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2164448, ~/Articles/ArticleHandler.aspx, 10/23/2016 8:34:18 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
CHK $6.68 Down -0.23 -3.33%
Chesapeake Energy CAPS Rating: ***
DOW $54.10 Up +0.28 +0.52%
The Dow Chemical C… CAPS Rating: *****
MMC $65.03 Down -0.19 -0.29%
Marsh and McLennan CAPS Rating: ****
RDS-B $54.03 Down -0.18 -0.33%
Royal Dutch Shell… CAPS Rating: ****
TRP $47.16 Up +0.03 +0.06%
TransCanada CAPS Rating: *****
XOM $86.62 Down -0.59 -0.68%
ExxonMobil CAPS Rating: ****