Report Finds that Natural Gas Exports Would Help Economy

Dec 6, 2012

A ship carrying liquefied natural gas (LNG). Photographer: Tomohiro Ohsumi/Bloomberg.

I’m feeling all Martha Stewart. A government-commissioned study finds that exporting natural gas would be a good thing.

A few years ago, there was fear that the U.S. wouldn’t have enough natural gas domestically and would have to import. Today, because of hydraulic fracturing tapping shale gas sources, the U.S. is inundated with the stuff. The Energy Information Agency projects that the United States “will become a net exporter of liquefied natural gas (LNG) in 2016 and a net exporter of total natural gas (including via pipelines) in 2020.” Plans are in the works to build new facilities to export LNG to hungry markets in Asia and Europe.

Would exporting LNG help or hurt the economy? The Department of Energy commissioned consulting firm NERA to figure that out. They determined it would result in net economic benefits:

Across all these scenarios, the U.S. was projected to gain net economic benefits from allowing LNG exports.  Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased.  In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports.   In all of these cases, benefits that come from export expansion more than outweigh the losses from reduced capital and wage income to U.S. consumers, and hence LNG exports have net economic benefits in spite of higher domestic natural gas prices.

This result reaffirms economic theory that shows that there are overall economic benefits when America trades with the world. Natural gas isn’t an exception.

The idea of selling energy to overseas customers may sound odd since it could be used domestically, but the fact is it’s already happening. In 2011 the top U.S. export wasn’t machinery or aircraft or technology; it was fuel. Exporting energy isn’t extraordinary, and it would be a net benefit to the economy.

Hopefully this news will only help win DOE approval for a number of export project licenses

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