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Cheniere signs a deal improving U.S./China trade relations

Posted at 9:21 PM, Mar 12, 2019
and last updated 2019-03-13 11:26:34-04

Cheniere energy is reportedly close to a deal to send liquefied natural gas to China.  Much of that gas will be processed and shipped from the company’s facility in Ingleside.

Experts believe the deal is a positive sign for more than just the energy industry.

The deal between Cheniere and Chinese firm Sinopec, when signed, will send 2,000,000 tonnes of LNG to China over 20 years at an estimated cost of $16-18 billion.  While that’s good news for Cheniere’s Ingleside facility, it’s also part of a trend that benefits the entire state.

Texas natural gas production is up, and Texans are reaping the benefits.

“Natural gas should be the future,” said Dr. Jim Lee. Economics Professor at Texas A&M Corpus Christi.  “This is what we have is South Texas, we have more gas than oil, actually.”

The state taxes natural resources when they come out of the ground.  In February, the state comptroller collected $163.8 million in natural gas tax revenue.  That’s up 22.2% from February 2018.  In comparison, oil tax revenue was more than $268.5 million, but down 12.6%, the second straight month where oil revenue was down from the year before.

So what do those revenues go to?

37.5% goes into the Texas Economic Stabilization Fund, better known as the “Rainy Day Fund”.  This legislative session, state lawmakers are considering using the fund to help communities still recovering from Hurricane Harvey.

Another 37.5% goes into the state’s Highway Fund.  This goes to the Texas Department of Transportation to build and maintain roads, and the Department of Public Safety troopers who patrol them.

25% goes to the Foundation School Program.  Among its uses, paying teacher salaries and for programs like special education.

The Cheniere/Sinopec deal keeps production growing, but there are other encouraging signs.  Experts believe Cheniere’s deal is a good sign the trade war between the U.S. and China will soon end.

That’s good news for local sorghum farmers, struggling with a 25% Chinese tariff on their crops.

But it’s only good news if the trade war ends.

“All bets are off if we don’t have a conclusion to the trade dispute,” said Lee.

The Cheniere/Sinopec deal will likely be announced shortly after the U.S. and China reach a trade agreement.  President Trump previously suggested that could come as early as this month.