An open letter to Elizabeth Warren on natural gas prices

I sent this letter to Elizabeth Warren in response to what I regard as an egregiously unjust attack on the natural gas industry. It contains many talking points that can be used in any discussion of natural gas prices this winter. You can read the letter in PDF form here.

Dear Senator Warren,

Today, 12/7, is the deadline you gave natural gas CEOs to respond to your letter blaming them for rising natural gas prices—which you are in fact to blame for.

Here’s how proud gas CEOs would answer you if they were not afraid of your political wrath.

Dear Senator Warren,

In your letter you claim “concern about rising natural gas prices,” which you attribute to my and other “energy companies’ corporate greed.”

But if you want to avoid unnecessarily high gas prices, you must recognize that they are your fault, not ours.

There are three basic facts that explain unnecessarily high natural gas prices:

1. Prices are determined by supply and demand, not “greed.”
2. America has an effectively unlimited supply of gas.
3. You and other anti-gas politicians have artificially restricted the supply of gas.

Fact 1: Prices are determined by supply and demand, not “greed.”

If we could control natural gas prices in our favor, why didn’t we do so during unprofitable 2015-20? Our profits are determined by a) the market price for our product and b) our efficiency.¹

When prices go up, it is crucial that companies can profit for two reasons.

1. We earned our profit through efficiency.
2. Profits motivate and make possible investment, which lowers long-term prices. Your railing against our profits is unjust and shortsighted.

Fact 2: America has an effectively unlimited supply of gas

Thanks to the shale revolution, aka “fracking,” which you have tried to ban, the US has enough natural gas to supply us and other nations for decades just with current technology—and for centuries with future technology.²

The only thing that can stop our industry from producing low-cost natural gas for America and the world—including the billions of poor people whose lives we improve—is politicians who coercively restrict our otherwise limitless ability to produce low-cost natural gas.

Fact 3: You and other anti-gas politicians have artificially restricted the supply of gas

When you and other anti-gas politicians place draconian restrictions on natural gas production and transport, and threaten to do far worse, supply goes down and prices go up.

The number one bottleneck to lower gas prices is a lack of pipelines and export facilities to transport natural gas from where it is drilled to markets throughout the US and around the world. You have contributed to this problem by avidly opposing pipelines and export facilities.³

Another major cause of unnecessarily high gas prices is a lack of investment in natural gas, caused by political threats to the future of natural gas. No one has threatened the future of natural gas more than you. You have even talked about imprisoning executives of our industry!⁴

The worst imaginable thing that could happen for natural gas prices is to ban fracking--which is a crucial technology for almost 80% of American natural gas. Yet you have advocated a policy of “ban fracking—everywhere.” Do you now see what a catastrophe this would be?⁵

Senator Warren, I am deeply disappointed that rather than doing the right thing and addressing your role in unnecessarily high natural gas prices, you are instead denying it and advocating a policy that will make things far worse: further restricting natural gas transport.

I must also add that your call to prevent the export of natural gas during a global energy crisis is particularly harmful. The American natural gas industry is, for millions of poor people around the world, their greatest hope to be able to heat their homes this winter.

Senator Warren, you owe the American public and our industry an apology for 1) your numerous actions to drive up the price of natural gas, 2) your denial of responsibility, and 3) your unjust attack on an industry that sustains billions of lives.

Sincerely,

A Proud Gas Producer

You can read the letter in PDF form here and in talking point form here.

Here’s the Twitter version of my letter. If you use Twitter, please share it with Senator Warren (@SenWarren). If enough people bring attention to this letter there’s a good chance Senator Warren will feel compelled to respond. https://twitter.com/AlexEpstein/status/1468198120886444033

References