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Dow Chemical splits from US manufacturing lobby amid gas export dispute

01.18.2013  | 

In a letter to NAM president Jay Timmons on Friday, and obtained by Dow Jones Newswires, Dow Chemical accuses the group of siding with member companies that are in the natural-gas industry, rather than adopt "a position of neutrality on an issue that clearly splits its membership."

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By TENNILLE TRACY

WASHINGTON -- Dow Chemical severed ties Friday with one of Washington's most powerful groups representing the manufacturing industry, citing differing opinions over whether the US should export its newly abundant supplies of natural gas.

Dow's decision to split from the National Association of Manufacturers marks a new chapter in the increasingly fierce battle over natural-gas exports, demonstrating how divisive the issue has become for some of the nation's largest companies.

In a letter to NAM president Jay Timmons on Friday, and obtained by Dow Jones, Dow Chemical accuses the group of siding with member companies that are in the natural-gas industry, rather than adopt "a position of neutrality on an issue that clearly splits its membership."

Dow Chemical is responding to a statement NAM posted earlier this week in support of natural-gas exports. In it, NAM said sales of natural gas to foreign buyers would create opportunities for US businesses.

A spokesman for NAM wasn't available for immediate comment.

Dow Chemical, by contrast, is pushing for limits on natural-gas exports. Its chief executive, Andrew Liveris, has said unchecked exports will increase domestic prices and threaten investments in the US manufacturing sector.

"The unfettered export of natural gas is widely understood to have serious implications for the cost and volatility of manufacturing feedstock prices," Dow says in its letter to NAM. "NAM's decision therefore places the views of oil and gas producers above the interests of its manufacturing members."

ExxonMobil, another NAM member company, is proposing to build a natural-gas export terminal in Texas. It has accused Dow and other companies opposed to limitless exports of being "protectionist."

Dow Chemical spokeswoman Nancy Lamb declined to comment on the letter. But she said the company's membership in another influential group, the American Chemistry Council, "remains to be seen."

The fight between Dow, ExxonMobil and, now, the groups that represent their interests in Washington comes as US regulators consider more than a dozen proposals to ship US natural gas to countries that lack a free-trade agreement with the US.


Dow Jones Newswires



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Charly
01.23.2013

USA, as free market world monger can't stop doing it just for HIS natgas and keep the pose when it comes to Arabian, Iraki, Russian, Qatar, Nigerian crudes and natgas ! competition is the word...

Bob D
01.23.2013

I think we would all like to see natural gas prices used as a vehicle to increase manufacturing investment. But this must occur within the free market. Dow is disgusting in their efforts to curb exports in order to subsidize the price of natural gas for their profits at the expense of destroying opportunities for new exploration.

Alok Pandit
01.23.2013

Obviously there is a need to balance the two perspectives. The policy makers have to find the right middle path. Fortunately, good econometric modeling tools are available, which enable us to build a good LP/NLP model, to optimize the value to the nation, over a 20-25 years horizon. I believe, the debate right now is being driven more by emotions than by solid data/facts.

Joseph Zanyk
01.22.2013

I agree with Dow. The oil companies and gas produces are only interested in the short term sale. The value added in manufacturig the chemicals in North America will add many jobs. The countries where the gas and oil is state controlled can dictate the price for natural gas and attract the companies like Dow to build the plants in their country and enjoy the increased value added and the increased employment that that provides. The uncontrolled sale and export of natural gas will take away any advantage to the North American manufactures with world price of the LNG. The manufacturing and resulting jobs in value add has a 5 fold gain to the State or country that has a competitive price for the basic raw material.

ED CLOUTIER PE
01.22.2013

INSTEAD OF EXPORTING US NATURAL GAS GIVE THE USA ECONOMY AND TIME TO RECOVER BY KEEPING OUR GAS PRICES LOW SO WE CAN REBUILD AMERICAN MANUFACTURING AND OUR POWER PLANTS. USE US GAS TO MANUFACTURE VALUE ADDED PRODUCTS

Keith Parsons
01.22.2013

ExxonMobil labeled Dow as being "protectionist" for supporting a limit to natural gas exports. And what is wrong with being a "protectionist"? Yes, the US will have the natural gas and liquids to become energy self-sufficient. But is it a good idea to reduce that window of time span when the energy glut will inevitably become the energy famine again? .

J W TRYKOSKI
01.22.2013

I'd go slow on approving natgas exports. It wasn't too many years ago all the experts has the US running out of natgas and oil production on a steep decline curve. Fracking is under government review which, depending on the outcome, could reverse current forecasts overnight. Chemical manufacturing is coming back to the US because of low cost natgas - lets not kill it by losing our competitive advantage of low cost natgas to mfg high value products.
Jack

Sam Kannappan
01.22.2013

USA promotes free market. Gas producers should be able to export if they find market. This will help to get funding for further exploration. DOW needs to find ways to compete.

Joe Harrington, PhD
01.22.2013

I agree with Dow about setting limits on exports but not necessarily the stated reasoning behind their view. Industry is shortsighted. Exports should be limited to protect the long term needs of resident citizens of North America, not to feed the greed of those who want to take as much as possible "now".

Vincent Muoio
01.22.2013

I agree with DOW. We should keep our Natural Gas in the States and use it to make higher value products from it. This would create many good paying US jobs, which we severely need. In addition, since the products are higher value and would replace imports or be exported, we would also lower our trade deficit.

Gustavo Heins
01.22.2013

That is a money convenience for some companies.

Claude Desormiers
01.22.2013

I believe that Dow Chemical bring a valid concern. However, the Chemical Industry can not rely long term on "cheap" gas for it manufacturing. I would suggest that by allowing for more export , the world gas price will balance and long term contract and arbitrage will be seen as more flexible.

Kamal Shah
01.22.2013

I believe NAM is correct in their support of LNG export. Dow may be mistaken in their view of higher raw material cost if we were to export gas.

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