Rising natural gas prices raise concerns for Louisiana industry


Only a few months ago, Louisiana’s chemical manufacturing sector seemed “poised for a booming year,” according to industry leaders and analysts. While the price of natural gas, the industry’s main fuel and feedstock, had risen a bit from last year, and Russia had just invaded Ukraine, the outlook still appeared bright.

But today, the Henry Hub price for natural gas is over $9 per million Btu, more than double what it was a year ago, which raises serious concerns for the domestic petrochemical industry.

“The biggest thing I’m worried about is the tropical season,” says David Dismukes, who directs the LSU Center for Energy Studies. “It’s not going to take a lot to knock these markets off kilter.”

Demand for commodity chemicals remains relatively strong, he says. But that could change as regulators here and abroad raise interest rates to rein in inflation.

Dismukes says the high price of natural gas portends a rough summer for energy markets. Entergy has announced a more-than-typical summer price hike, citing gas prices along with hurricane recovery costs.

The good news for domestic chemical manufacturers is that, while energy prices are high here, they’re higher for their competitors in Europe and Asia. And Louisiana continues to see project announcements in the “clean” energy space, Dismukes notes.

But projects that would expand capacity likely will be put on hold, if they have not already, though Dismukes says layoffs are far from imminent. And while high prices overseas may be good for liquefied natural gas exporters in Louisiana, LNG exports could become more controversial politically as energy prices rise at home.