Seeking Alpha

Dow Chemical's (DOW) effort to limit U.S. natural gas exports would effectively create a price...

Dow Chemical's (DOW) effort to limit U.S. natural gas exports would effectively create a price cap for the commodity, an Exxon (XOM) executive says. Dow begs to differ, of course, but it has concerns about "a tipping point at which LNG exports turn from a net positive for this nation to a net negative... Once you hit that point, it’s too late to go back."
Comments (11)
  • Stone Fox Capital
    , contributor
    Comments (5589) | Send Message
     
    free markets are always the answer. Its hard to argue that nat gas prices will be cheap or expensive based on a domestic market only considering just the last 10 years have seen dramatic price swings.

     

    Recent low prices have lead to limited drilling which will cause prices to soar in the next year. Exports have the potential of creating price stability or relative stability.
    21 Mar 2013, 05:16 PM Reply Like
  • SafisKusai
    , contributor
    Comments (231) | Send Message
     
    are they worried that exporting will raise the price of nat gas in america due to a balancing effect with the ultra high prices in the rest of the world?
    21 Mar 2013, 06:09 PM Reply Like
  • haphar
    , contributor
    Comments (9) | Send Message
     
    I think Dow hasn't done the complete analysis. They need cheap fuel and cheap feedstock. Restricting sales of LNG will put downward pressure on the price of fuel gas but will also likely result in a shortfall of natural gas liquids, the feedstocks for their plants, as producers reduce production due to low natural gas prices. Their feedstock is merely a byproduct of natural gas production. The price of their feedstock will probably rise. If they're smart enough to predict the net impact on their business, they're smarter than me.
    21 Mar 2013, 06:29 PM Reply Like
  • davidbdc
    , contributor
    Comments (3139) | Send Message
     
    DOW cares only about their own profits. They just basically closed half of a facility in LA at the end of last year so spare us the nonsense that they somehow care about American manufacturing.

     

    If people want to spend billions building LNG facilities then go right ahead. There are lots of good jobs in the oil fields, maintaining pipelines, working the ports, working in the LNG facilities, etc.
    21 Mar 2013, 06:32 PM Reply Like
  • Hendershott
    , contributor
    Comments (1473) | Send Message
     
    Should we limit Dow's ability to export so their products would be inexpensive in the US because they get their feedstock cheap?
    21 Mar 2013, 07:59 PM Reply Like
  • whoppmeyer
    , contributor
    Comments (3) | Send Message
     
    Yes - if its good for Dow on the front end - should be the same on the back end.
    22 Mar 2013, 05:02 PM Reply Like
  • WisAl
    , contributor
    Comments (7) | Send Message
     
    As a DOW stockholder, I resent our CEO's efforts at price fixing. Price fixing is price fixing whether condoned by government or by market manipulation. The best answer is ALWAYS the "invisible hand" of the free market.
    21 Mar 2013, 10:28 PM Reply Like
  • SafisKusai
    , contributor
    Comments (231) | Send Message
     
    i wouldnt call it price fixing per se... more gdp fixing. They are trying to fix the direction of the supply from external to internal so as to ensure that net exports don't have a negative effect on consumption due to higher costs
    21 Mar 2013, 11:02 PM Reply Like
  • Anne Bonney
    , contributor
    Comments (78) | Send Message
     
    Dumped DOW---there are better stock choices...such as XOM. This is simple---if you cannot make a profit, shutter the well. Gas, oil, whatever. Sit on it. Yawn. Then, drill where you can make a profit. Say, most anywhere else.
    22 Mar 2013, 12:46 AM Reply Like
  • TreyT
    , contributor
    Comments (109) | Send Message
     
    It's ironic when the CEO of a big US company wants to control the input price of his manufacturing process by placing limitations and caps on other companies.

     

    We should be exporting gas if market conditions warrant, we have abundant supply, the impact on price would likely be negligible and it would likely smooth supply/demand resulting in price stability. A large price jump is unlikely, especially over the medium and long term. There are large gas projects underway in Australia, Russia, numerous middle east countries and others that will all provide gas to the world markets. I don't see the US nat gas prices being impacted by more than about 20% if we export.

     

    The only way government should restrict exports is if/when it becomes a national security issue. Given our current supply levels that seems decades away.
    22 Mar 2013, 08:40 AM Reply Like
  • Hendershott
    , contributor
    Comments (1473) | Send Message
     
    The obvious solution for Dow is to invest in NG and NGL production. Vertical integration. That would keep Dow's costs down to the cost of production. They could buy a bunch of acreage and wells from CHK, for instance.
    22 Mar 2013, 06:32 PM Reply Like
DJIA (DIA) S&P 500 (SPY)