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Winter Storms Hike Gas Bills for Big Manufacturers
27 Feb
Summary
- International Paper warned of $20M to $25M in storm-related costs.
- Chief Executive anticipates total costs to reach $40M to $50M.
- Manufacturers are disadvantaged compared to LNG exporters.
Severe winter storms have caused a dramatic increase in natural-gas bills across the United States, significantly affecting major industrial manufacturers.
International Paper, a prominent affected company, reported gas curtailments in Texas and heightened prices at its containerboard mills and box plants. Initially, the company alerted investors to potential losses of $20 million to $25 million stemming from the weather events. However, the Chief Executive later revised this estimate, anticipating that the total impact, largely due to natural gas costs, could range from $40 million to $50 million.
Manufacturers like International Paper argue they are placed at a disadvantage compared to liquefied natural gas (LNG) exporters. These exporters leverage their long-term supply agreements with international buyers to secure essential pipeline space. Consequently, when domestic demand for natural gas escalates during extreme weather conditions such as winter storms or summer heat waves, factories often face restricted access to supply or are compelled to pay exceptionally high prices on the spot market.
