Marcy de Luna, Bianca Flowers

HOUSTON/CHICAGO – Rising natural gas prices are causing a rise in manufacturing costs and transport costs for many U.S. industry sectors. This situation will continue as the United States continues to export more gas to Europe to compensate for the loss of Russian gas supplies due to sanctions.

U.S. sales have more than doubled over the past year. It is this that has made Americans mad at both the U.S. government and its energy sector.

Executives from industrial companies believe that the United States should no longer be an importer of natural gases and instead focus on its domestic needs. Gas producers insist on more drilling permits and export capacity.

Insufficient pipeline capacity has caused a decrease in gas output at key locations in the United States. Production was also affected by bad weather, which boosted the demand.

Russia’s invasion and subsequent sanctions on Ukraine have resulted in a rush to export gas from the United States. In mid-March, 15% of the domestic production was consumed by U.S. LNG plants.

Specialty chemical makers are seeing higher gas prices. Huntsman Peter Huntsman, Chief Executive of the Polyurethanes Corporation (NYSE:) Corp that are used in electronics and building materials as well as furniture manufacturing, spoke to Reuters.

He said that consumers will experience price shocks. He said that the company had experienced more than $1.5B in increases in raw materials costs in the past year. This was mainly due to energy.

Westlake Chemical (NYSE:) Plastics and Building Siding manufacturer calculates that for each $1 in British Thermal Units (mmBtu), increase in natural gas its annual cost rises by about $100 Million.

Chip McElroy (chief executive at McElroy Manufacturing), which produces giant machines that fuse pipes of thermoplastic, says, “Inflation from energy is just one more insult.”

U.S. Natural gas futures surged to $7.854 a mmBtu, up from $3.730 at 2022’s start. But they are still far below Europe’s benchmark of 31% and Asia’s standard of $24 a mmBtu.

Analysts expect that prices will continue to rise due to the high demand for European imports.

Paul Cicio of the Industrial Energy Consumers of America, president of the group, wrote last month to Jennifer Granholm in a written statement. The group asked Washington to stop approving LNG export permit until U.S. gasoline stockpiles have been rebuilt.

BIG HEATING DEMANDS

Some business owners are afraid that their heating bills will skyrocket in winter. They point out that prices have not fallen as much in this spring’s heating demand declines, which is why they don’t expect to see a typical rise in costs next year.

John Schmeiser CEO, Western Equipment Dealers Association (a trade association), stated that last winter’s heating costs were not sustainable. That’s an enormous natural gas bill, especially when you consider shop sizes of between 30,000 and 40,000 square feet.

Some businesses have managed to weather the increase in costs. Nucor The largest U.S.-based steelmaker is (NYSE:). A spokesperson stated that it has offset some natural gas prices at its steelmills partially by selling some of what it produces to its own consumption.

High prices are needed to encourage new production, according to LNG industry executives. According to them, the Biden administration should approve any new projects.

According to Dan Brouillette (President of Sempra Infrastructure), “There’s a need for more pipeline development as well as for export facility development.”

The majority of new projects will not be online before 2024 or late next year.

According to Paul Sankey, analyst at Sankey Research, U.S. gaz futures should be $20 per mmBtu right now to keep down demand for U.S. LNG.

He stated that there is no upper limit on U.S. gas supply until the arbitrage to export LNG has been broken.