Stupid Inflation Tips, Round 2

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Toby Rice, CEO of EQT Corp.


Photo:

Brendan Mcdermid / Reuters

Progressives want Americans to believe that inflation is always and everywhere the result of corporate greed rather than their policies. See how they try to blame the rising energy prices on US oil and gas producers.

Two days before Thanksgiving, Elizabeth Warren sent a letter berating major U.S. oil and gas producers for limiting production, increasing exports, and “putting their huge profits, stock prices, and dividends on investors, as well. that millions of dollars in compensation and bonuses for CEOs ”before Americans. The Massachusetts senator added, “These record natural gas exports are pushing up prices for consumers, and they show no signs of slowing down. “

EQT Corp.

CEO Toby Rice responded to Ms Warren on Monday in the cap of a letter that deserves wider circulation. While not on the U.S. left’s most wanted list, at least not yet, EQT is the largest producer of natural gas in the United States and has a huge footprint in the Appalachian Shale Basin. .

Rice notes that the average natural gas price for 2021 ($ 4.80 per mcf or thousand cubic feet) is significantly lower than the 20-year average of $ 5.70 mcf. Between 2005 and 2008, before the US shale drilling boom for natural gas, prices ranged from approximately $ 6 million to 13 million cubic feet. (See graph nearby.) “Yes, the price of natural gas increased rapidly from 2020 as the world’s economic engines reignited, but natural gas prices in 2020 were the lowest in more than two years. decades, a year in which we exported LNG, ”he writes.

US LNG exports have grown rapidly since 2015 and have doubled in the past two years due to growing global demand for fuel to replace coal. But LNG exports still only represent around 10% of US production. Prices are lower than most of President Obama’s first term, when LNG exports were virtually non-existent.

Exports encouraged increased production, which helped keep prices low for Americans. The fall in gas prices was passed on to consumers through lower electricity prices and offset the high cost of integrating solar and wind energy into the electricity grid. Americans would pay a lot more for electricity today if it weren’t for the shale fracking boom of the past decade.

LNG exports also reduce global CO2 emissions. Rice calculates that the shift from coal to gas in the United States has reduced CO2 emissions by the equivalent of electrifying 190 million cars, or about 70% of the total number of cars in the United States. Unlike electric vehicles, natural gas does not require hundreds of billions of dollars in government subsidies.

“The United States has a large amount of natural gas, more than any other country in the world,” concludes Rice. “To best combat 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 United States doesn’t, Vladimir Putin has made it clear that Russia will, increasing its energy influence over Europe.

Natural gas prices have increased this year because supply has not kept up with demand. The Democrats’ tax and regulatory attack on fossil fuels and pressure from progressive investors have persuaded some producers to restrict production and return profits to shareholders rather than invest in expanding supply.

The Biden administration this week reported a recent drop in energy prices triggered by the Omicron Covid variant and milder winter weather forecasts. Democrats want to take credit for lower prices that have nothing to do with their policies while dodging political responsibility for the price increases their policies lead to. Thank Mr. Rice and EQT for setting the record straight.

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Published in the print edition of December 9, 2021.


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