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By Marcy de Luna and Bianca Flowers
HOUSTON/CHICAGO (Reuters) - Skyrocketing natural gas prices have raised manufacturing and transportation costs across many U.S. industries, and the situation should persist as the United States exports more gas to Europe to make up for Russian supplies lost to sanctions.
U.S. natural gas futures have doubled this year, far more than the increases in retail gasoline and diesel that have made Americans angry at the U.S. energy industry and the government.
Many industrial company executives believe the United States, once a large importer of natural gas, should stop exporting gas and prioritize its own needs. But gas producers are pushing for more export capacity along with more permits for drilling.
Gas output in key locales in the United States has slowed this year, partly due to insufficient pipeline capacity. Bad weather also cut production and boosted demand.
Russia's invasion of Ukraine and subsequent sanctions have caused a scramble for U.S. exports of gas chilled to liquid form. U.S. liquefied natural gas (LNG) plants consumed 15% of domestic production in mid-March.
Higher gas prices are driving up costs for specialty chemical maker Huntsman Corp, which produces polyurethanes used to make electronics, building materials and furniture, Chief Executive Peter Huntsman told Reuters.
"Consumers are going to see (price) shocks," he said. The company has passed through more than $1.5 billion in raw material cost increases in the last year, he said, most due to energy.
Westlake Chemical, which makes plastics and building siding, calculates for every $1 per million British thermal units (mmBtu) increase in natural gas, its annual costs rise about $100 million.
"Inflation coming from energy is just the next insult to injury," adds Chip McElroy, chief executive of McElroy Manufacturing, which makes giant machines that fuse thermoplastic pipes.
U.S. natural gas futures have surged to $7.854 per mmBtu on Friday from $3.730 at the start of 2022 but remain far lower than Europe's benchmark of $31 and Asia's of $24 per mmBtu.
Surging demand from Europe, which is trying to wean itself off Russian imports, has analysts expecting prices will remain elevated.
"The manufacturing sector cannot invest and create jobs without assurances that our natural gas and electricity prices will not be imperiled by excessive LNG exports," Paul Cicio, president of he Industrial Energy Consumers of America (IECA), a trade group whose members include smelters, plastics and paper-goods makers, said last month in a letter to U.S. Energy Secretary Jennifer Granholm.The group wants Washington to stop approving LNG export permits until low U.S. gas stockpiles are rebuilt.