The Texas-based Oil & Gas Workers Association is suing to stop the Biden administration’s current pause in new approvals of liquefied natural gas (LNG) export agreements with legal help from the New Orleans-based Pelican Institute for Public Policy.
The lawsuit, which was filed May 16 in the Western District of Louisiana, argues that the administration’s Jan. 26 action represented a wholesale policy shift and an unconstitutional effort that will unnerve a key sector of the U.S. economy and hurt oil and gas workers.
“This change in position flagrantly disregards: the Natural Gas Act’s mandate to approve LNG Export applications; the decades of (Department of Energy) policy to review LNG export applications on a case-by-case basis; the constitutional separation of powers prohibiting the executive branch from creating law; … and (the) oil and gas industry’s reliance on exports, including the over 47,000 members of (the) plaintiff’s association that rely on the existence of a LNG export industry for employment,” the complaint states.
The LNG pause goes against a DOE order issued last year that denied an environmental coalition’s petition to temporarily stop allowing new LNG export licenses until new policy guidelines have been completed, according to the lawsuit.
The plaintiffs seek a court ruling declaring the “LNG export ban” as unlawful under the federal Administrative Procedures Act as well as an order enjoining President Biden and federal energy officials from halting consideration of LNG export licenses.
But Energy Innovation Policy & Technology LLC, a California-based nonpartisan energy and environmental policy firm, released a study in February concluding that completing the pending and proposed LNG facilities would result in U.S. consumers being burdened with natural gas rate increases of 9% to 14%. In turn, U.S. households, businesses and industry would have to pay $11 billion to $18 billion more per year due to the impact on the market price of the fuel, the report says.
“Unlike oil, which is a global commodity with a single global price, natural gas markets are far more fragmented due to limited import and export capacity,” Rachel Goldstein, a co-author of the Energy Innovation report, said in an email to the Louisiana Record. “Because the U.S. is such a large natural gas producer, domestic prices tend to be quite low.”
When the United States restricts its natural gas exports, the country’s gas supply is more contained domestically, putting downward pressure on natural gas rates, according to Goldstein.
“If oil and gas companies are allowed to export more gas to other parts of the world where prices are higher, they will sell to the highest bidder, increasing U.S. natural gas prices at the expense of American consumers,” she said.
In the short term, a lifting of the export pause could lead to average U.S. households paying up to $40 per year more than if the pause continues, with Americans in colder states paying even higher prices in winter, the report states.
Lifting the pause would inflict an even greater burden on low-income Americans, according to the study.
“Low-income American households spend about 8.6% percent of their total income on energy bills, a burden nearly three times higher than non-low-income households, so they will disproportionately feel the impacts of these increased heating costs,” the report says.
The pause also gives U.S. policymakers more time to consider the impact of greenhouse gas emissions resulting from increased exports, according to the Energy Innovation report. The administration has stressed that the pause will not affect the nation’s ability to supply its allies with adequate LNG supplies in the near term.
In 2023, about half of the nation’s LNG exports went to Europe, the White House said when it announced the pause.