U.S. methane gas futures jumped between 5% and 7% Tuesday in response to reports Freeport LNG began receiving methane gas over the weekend and predictions for cold weather across the country. The Texas gas export terminal has been shut down for more than seven months after a major explosion in June. Freeport LNG accounts for approximately 20% of the gas exported from the US, so with its closure more gas has stayed in the country and with the increased supply, domestic prices dropped.
Even though many analysts expect the plant will remain closed until at least February, the potential for Freeport LNG to return to full operation and begin exporting gas overseas (where prices are substantially higher) was enough to push up domestic prices. Gas futures have repeatedly spiked on Freeport LNG’s repeated (and then delayed) reopening announcements, highlighting the degree to which LNG exports are raising energy prices for American families and businesses. (Freeport & gas futures: Reuters, Reuters, OilPrice, Seeking Alpha; Energy prices: ABC)