06 March 2013 03:43 [Source: ICIS news]
HOUSTON (ICIS)--One of the most self-defeating obstacles facing the US unconventional oil and gas industry is the threat of regulatory overreach that interferes with free market and free trade in natural gas, an ExxonMobil Chemical executive said.
There is a call in the industry for the federal government to restrict the export of liquefied natural gas (LNG) liquids, and the effort to block exports would impede investments, CEO Stephen Pryor said during IHS CERAWeek.
“It would present a harmful and selective departure of free market and free trade principles, one that would direct the government to determine the supply of natural gas and indirectly directing the price,” Pryor said.
“Increased demand for gas because of LNG exports would likely cause supply to increase,” he added. “Conversely, if the government was to artificially suppress demand and artificially cap gas prices, supply would trickle.”
Pryor pointed out that government interference into US energy markets in the 1960s and 1970s resulted in unintended consequences, including falling production, severe shortages that reached more than 25% of total demand at one point, price fights and lessened economic activity.
“Protectionism and price controls shrink the economic activity. Free trade and free market expand,” Pryor said. “That is something that’s most understood when it comes to other leading exports like chemical and cars, so it should be with energy products as well.”
IHS CERAWeek is an energy conference that runs through Friday.
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