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Dow Chemical Fights Ally Exxon’s Natural Gas Export Push
Jan. 24 (Bloomberg) — Exxon Mobil Corp. and Dow Chemical Co., big-dollar lobbying allies on many issues in Washington, are on opposite sides of a high-stakes fight over how much of rising U.S. natural gas supplies should be sold overseas.
Exxon, the nation’s largest producer of natural gas, says exports will create jobs, encourage more production and lower the trade deficit. Dow, the largest U.S. chemical maker by revenue, uses gas and its byproducts and leads a coalition that wants to keep prices low by limiting the amount that leaves the country.
The two are among the most active corporations in lobbying Washington, spending a combined $23 million in 2012, according to public records. They are more often allies than enemies. Both supported a bill to improve trade relations with Russia last year, for example. Now they’re sniping at one another through competing trade organizations and blog postings on the gas issue.
“It means a lot of wealth for them, so they are going to spend a lot of money on an issue that’s fairly narrow in the minds of most Americans,” said James Thurber, director of the Center for Congressional & Presidential Studies at American University in Washington.
“The fight shows that while ‘‘big business’’ tends to get lumped as a single entity in the public’s mind, in truth ‘‘powerful companies fight each other all the time,’’ Thurber said in a phone interview.
The companies both belong to the U.S. Chamber of Commerce, the American Chemistry Council, and until recently, the National Association of Manufacturers — three of the largest business groups in Washington.
Dow quit the manufacturing group last week over its support for natural gas exports.
The issue is shaping up to be one of the most contentious energy policy debates of this Congress, with Ron Wyden, the new chairman of the Senate Energy and Natural Resources Committee, vowing to examine whether significant natural gas exports risk higher energy costs for U.S. consumers.
The debate is likely to be repeated as hydraulic fracturing increases domestic oil and natural gas production, reversing the U.S.’s reliance on foreign sources of energy, Paul Bledsoe, a Washington-based energy consultant, said in an interview.
Now the question is what the nation should do with its bounty of natural gas, coal and oil.
‘‘This is going to keep happening,’’ Bledsoe, who advised President Bill Clinton on energy issues, said. Energy development ‘‘raises new challenges along with new opportunities of an oil- and gas-rich U.S. As public policy, even as a philosophy, we haven’t come to grips with it.’’
In business, Dow, based in Midland, Michigan, considers the Irving, Texas-based Exxon to be a ‘‘valued supplier,’’ said Nancy Lamb, a company spokeswoman.
Dow backs restrictions on natural gas exports even as it supports free trade because energy is ‘‘foundational to the nation’s economy, in a way that other products are not,’’ Lamb said in an e-mail.
Ken Cohen, Exxon’s vice president of public and government affairs, called the position of America’s Energy Advantage, the coalition Dow leads, ‘‘opportunistic” and “protectionist.”
“More trade means more supply – and with it, more jobs and economic expansion,” Cohen wrote on Exxon’s blog.
Other big companies have been drawn into the fight besides Dow and Exxon. The Energy Department is reviewing 16 applications to build export terminals to ship supplies to countries that don’t have free trade agreements with the U.S., a group that includes Japan.
The group is a “small gaggle of companies” that wanted to “limit the ability of other companies to export their products,” Exxon’s Cohen wrote in a Jan. 17 blog posting.
Dow, a limited partner in a proposed $6.5 billion export project at a Texas terminal, now has “no interest in” new investments in the venture, George Biltz, Dow vice president of energy and climate change, said in a telephone interview. The project is awaiting approval from the Energy Department.
Dow and Exxon are preparing to submit comments by today’s deadline about a study the Energy Department released in December that found exports of gas would benefit the U.S. economy.
The department has said it will use the report as it decides whether to approve the export terminals.
Exxon and Dow are likely to continue to play leading roles because of how much each spends on lobbying each year. Exxon spent just under $13 million last year, according to public records filed with the Senate. That makes it among the biggest advocacy spenders in Washington, according to the Washington- based Center for Responsive Politics, which tracks lobbying and campaign spending.
Dow spent more than $10.5 million to lobby last year, according to public records. Chief Executive Officer Andrew Liveris discussed natural gas exports with Wyden during a December dinner at Bistro Cacao in Washington, according to Wyden spokesman Keith Chu.
In Wyden, Dow may have a sympathetic ear. The Oregon Democrat said he was “deeply concerned” about the process the Energy Department would follow to weigh the export applications in a Jan. 10 letter to Secretary Steven Chu.
The analysis may have underplayed the domestic demand for the fuel, Wyden said.
Keith Chu, the committee’s spokesman, said Wyden also has met with Thomas Farrell, chief executive officer of Dominion Resources Inc., which has applied to build a natural gas export terminal, and with Jack Gerard, CEO of the American Petroleum Institute, which represents Exxon and other oil and gas companies.
Besides Congress and the Energy Department, the companies are battling for support from large trade associations to which they belong.
The American Chemistry Council retracted a week-old statement endorsing exports after Dow publicly complained.
“The statement accurately reflects executive committee policy dating to February 2012,” Scott Openshaw, a spokesman for the American Chemistry Council, said in an e-mailed statement. “However, the issue and its implications for some of our members have evolved. We therefore plan to further discuss this issue to assure all members’ views are fully represented and the implications understood.”
Dow’s Lamb and Openshaw both declined further comment on that matter.
Dow left the National Association of Manufacturers after that group endorsed exports.
“Earlier this week, with no discussion or notification, NAM adopted a new position on this issue which places the interest of oil and gas producers above the interests of its manufacturer members,” Dow said in a statement. “For these reasons, Dow has chosen to withdraw from membership.”
Bledsoe, the energy consultant, said Dow has to show that limiting exports will create more jobs than unfettered overseas sales to win the debate.
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