DOW: Quit Your Bellyaching

 | Dec 07, 2012 | 2:52 PM EST
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Dow Chemical (DOW) should stop its bellyaching and go buy a natural gas company.

No sooner had the energy department study come out saying that the U.S. should export the fuel that's the lifeblood of plastics, Dow issued a statement saying the study was deeply flawed. Dow wants a more competitive, cheaper market for natural gas in order to benefit the consumers -- of which Dow is the biggest one.

First, I think there is enough natural gas to export all we want and then some. The technology has opened up fields that used to be economic unfeasible. We have found natural gas in a ton of places where we didn't even know we had it a decade ago. We burn off more than we use each year. We have basically stopped drilling for the stuff and yet the price doesn't rise.  

Second, it will take forever to get the ports ready to ship it. The equipment costs a fortune. Take a look at the overruns for the Gorgon natural gas export plant in Australia. It's got a $50 billion price tag and the costs are still running up.

Cheniere Energy (LNG) has been green-lighted and we know the company is raising a ton of capital, but who knows how long it will take to get that one off the ground? Dominion Resources (D) owns a terminal and wants to ready it, and that task will employ thousands. Again, though, it's going to be held up for years by the need for approvals.

Finally, these natural gas companies are selling at prices that value natural gas at $3-$4 (per million BTU), not the $5-$7 or more that Dow's probably worried about. Why not go buy one? They all have a huge amount of acreage. This way, Dow would be assured all the natural gas it needed for years and years.

I am tired of their bellyaching. Dow, go do something!

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