China’s Gas Tariffs Are a Permian-Size Problem for Oil - Bloomberg

China’s Gas Tariffs Are a Permian-Size Problem for Oil - Bloomberg:

Energy dominance sure does seem to come with a hefty dose of self-flagellation. 

The latest bit of America’s energy sector to feel the over-the-shoulder lash is the liquefied natural gas-export business. On Friday, LNG joined the list of goods that China will hit with tariffs in retaliation for U.S. ones. This is problematic when you consider China has taken 13 percent of U.S. LNG exports (and more like a quarter last winter), according to Bloomberg New Energy Finance.

As I wrote here about U.S. oil, a tariff imposed by one of the world’s largest importers of fuel will act as an effective tax on exporters. China buys U.S. LNG on the spot market, so its demand is very sensitive to the spread between benchmark U.S. natural gas prices and Asian prices. That spread has to absorb the cost of converting U.S. gas into a liquid (typically a 15 percent premium) and shipping it across the world (about $2 per million BTU via the Panama Canal, according to BNEF’s LNG Shipping Calculator).