US Ties Qatar in LNG Exports // How the Ukraine War Hit Commodity Prices // FirstEnergy on the Hook for Bribery Scandal

US Ties Qatar in LNG Exports

America caught up to Qatar as the world's largest liquified natural gas exporter.

"Both countries exported 81.2 million tons in 2022," reports Bloomberg. "While that’s a modest increase for Qatar, it marks a huge leap for the US, which only began exporting LNG from the lower-48 states in 2016 and has seemingly overnight become a dominant force in the industry."

A shale gas revolution, coupled with billions of dollars of investments in liquefaction facilities, transformed the US from a net LNG importer to a major supplier. The global energy crisis and a shift away from Russian pipeline gas has increased demand for US LNG, which could also help support construction of several new export projects across the Gulf Coast.

Several factors played a role: the shale revolution, billions of dollars plowed into liquefaction facilities, and the world's pivot away from Russian natural gas to American LNG. That pivot may also aid the construction of export facilities along the Gulf Coast.

Had the Shippingport facility not caught fire last year, America would have overtaken Qatar. It should come back online later this month, giving America the edge. But keeping up with the Qataris won't be easy.

"[T]he US will need to build a lot more LNG export capacity if it wants to hold onto the top spot through the end of this decade," reports Bloomberg. "Qatar is in the midst of an enormous expansion to its production facility, which could solidify its position as the LNG leader from 2026. Australia is poised to remain as the world’s third-largest supplier."

How the Ukraine War Hit Commodity Prices

How did the response to Russia's invasion of Ukraine impact commodity prices?

"After increasing 68% from January through June, the energy component of the S&P Goldman Sachs Commodity Index (GSCI) ended the year 10% higher than the first trading day of 2022," reports the Energy Information Administration.

"Two major crude oil benchmarks—West Texas Intermediate (WTI) and Brent—account for 70% of the weighting in the energy sub-index. As a result, the energy sub-index tends to follow major price movements in the crude oil market," the EIA continues.

Once tanks rolled toward Kyiv and Europe slapped Russia with sanctions, crude prices galloped upward. WTI crude prices rose to $114 per barrel in June--the highest price in real terms since the fall of 2014.

But that wasn't the only factor. Fears of a rate hike from the Fed and economic slowdown in China due to its "zero covid" policy also played a role, raising WTI crude prices 3% compared with the opening day of the trading year.

Twenty-four percent of the S&P GSCI energy sub-index came from the combination of three petroleum products:

• RBOB (a reformulated grade of gasoline used as the benchmark for gasoline trading)

• ULSD (ultra-low sulfur diesel, which is used as a benchmark for heating oil trading)

• Gasoil (the European and Asian designation for No. 2 heating oil and No. 2 diesel fuel)

The prices of RBOB, ULSD, and gasoil increased by 5%, 41%, and 36% respectively due to global low inventories, reduced refinery capacity, and disruptions to Russia's distillate exports caused by sanctions. The price of natural gas increased by 20% for two reasons: record liquefied natural gas exports to Europe to replace Russian gas and increased natural gas consumption for electricity generation. The U.S. benchmark Henry Hub natural gas price reached its highest level in over a decade in August before declining later in the year.

FirstEnergy on the Hook for Bribery Scandal

FirstEnergy, an Ohio-based company that owns 10 electric utilities, is being investigated by the Federal Energy Regulatory Commission (FERC) for possibly violating FERC's accounting and reporting rules and by the Securities and Exchange Commission (SEC) for possibly violating securities laws.

The investigations are related to FirstEnergy's involvement in a bribery scheme in support of HB 6, a piece of energy legislation in Ohio that provided funding to two nuclear power plants owned FirstEnergy's subsidiary Energy Harbor.

FirstEnergy initially claimed to have fully responded to FERC's requests for information, but later cooperated with an investigation into allegations of racketeering related to the passage of HB 6. The company has stated that it is "probable" that it will incur a loss as a result of the SEC investigation.

“Given the ongoing nature and complexity of the review, inquiries and investigations, [FirstEnergy] cannot yet reasonably estimate a loss or range of loss that may arise from the resolution of the SEC investigation,” the FirstEnergy said.

"FirstEnergy will pay $3.9 million for failing to fully provide the Federal Energy Regulatory Commission’s enforcement office with requested lobbying and accounting information, according to an agency order issued Friday," reports Utility Dive.

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