Dow, Exxon battle over export of natural gas

Fuel Fix:

Exxon Mobil Corp. (XOM) and Dow Chemical Co. (DOW), big-dollar lobbying allies on many issues in Washington, are on opposite sides of a high-stakes fight over how much of rising U.S. natural gas supplies should be sold overseas.

Exxon, the largest producer of natural gas in the nation, says exports will create jobs, encourage more production, and lower the trade deficit. Dow, the largest U.S. chemical maker by revenue, uses gas and its byproducts and leads a coalition that wants to keep prices low by limiting the amount that leaves the country.

The two are among the most active corporations in lobbying Washington, spending a combined $23 million in 2012, according to public records. They are more often allies than enemies. Both supported a bill to improve trade relations with Russia last year, for example. Now they’re sniping at one another through competing trade organizations and blog postings on the gas issue.

“It means a lot of wealth for them, so they are going to spend a lot of money on an issue that’s fairly narrow in the minds of most Americans,” said James Thurber, director of the Center for Congressional & Presidential Studies at American University in Washington.

“The fight shows that while ‘‘big business’’ tends to get lumped as a single entity in the public’s mind, in truth ‘‘powerful companies fight each other all the time,’’ Thurber said in a phone interview.

The companies both belong to the U.S. Chamber of Commerce, the American Chemistry Council, and until recently, the National Association of Manufacturers — three of the largest business groups in Washington.

Dow quit the manufacturing group last week over its support for natural gas exports.

The issue is shaping up to be one of the most contentious energy policy debates of this Congress, with Ron Wyden, the new chairman of the Senate Energy and Natural Resources Committee, vowing to examine whether significant natural gas exports risk higher energy costs for U.S. consumers.

The debate is likely to be repeated as hydraulic fracturing increases domestic oil and natural gas production, reversing the U.S.’s reliance on foreign sources of energy, Paul Bledsoe, a Washington-based energy consultant, said in an interview.

Now the question is what the nation should do with its bounty of natural gas, coal and oil.

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I favor trade.  Even if the prices fluctuates upward, Dow will still have a competitive advantage over foreign companies that will have to pay for the transport of the gas to their facilities in Europe and Asia.  Ironically, Exxon will have the same situation with its own chemical manufacturing facilities.

In the end, free markets engaging in free trade are best for all consumers and will promote more competition.  That competition will also lead to greater efficiency.  It is not like we are dealing with scarcity when it comes to natural gas.  The export market will also lead to more production which will drive up supply even more.