A U.S. Department of Energy-commissioned study finds natural gas exports would benefit the nation’s economy. The study throws cold water on efforts by trade protectionists to pass legislation banning energy companies from transporting natural gas for sale in other countries.
All Scenarios Show Benefits
The study—produced for the U.S. Department of Energy by NERA Economic Consulting—evaluated multiple scenarios of future natural gas exports. In all the evaluated scenarios natural gas exports would create net economic benefits for the United States. This would be the case even if natural gas exports led to a modest increase in domestic natural gas prices.
“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,” said the study. “Exports have net economic benefits in spite of higher domestic natural gas prices.”
According to NERA, natural gas exports would bring in $14 billion to $32 billion from foreign nations. The economy-wide benefits from this influx of revenue would more than offset the modest increase in domestic natural gas prices.
Some Corporations Object
Some corporations that utilize large quantities of natural gas are arguing for laws to ban natural gas exports, to keep their costs low. Others, however, point out the benefits of energy exports would help the U.S. economy as a whole, just as oil exports benefit the overall Saudi Arabian economy.
The U.S. Department of Energy has invited public comments on the study, which DOE will use to consider export applications. DOE has already received applications for 15 export projects with an export capacity of 26.5 billion cubic feet a day – more than a third of current U.S. consumption of natural gas.
More Exports, More Benefits
Economy-wide benefits will be based on the amount of exported natural gas, the study concluded. More benefits will accrue when energy companies export more natural gas.
“Welfare improvement is highest under the high export volume scenarios because U.S. consumers benefit from an increase in wealth transfer and export revenues,” the study concluded.
“The report was no surprise,” said Daniel Simmons, director of regulatory and state affairs for the Institute for Energy Research. “It was economics 101: Exports create net benefits.”
“Just like exporting agricultural products, industrial machines, or medical equipment helps the United States, exporting natural gas will help as well,” Simmons explained. “The free trade of goods brings benefits to all nations.”
Dave Banks ([email protected]) is director of Washington, DC operations for the Alliance for Wise Energy Decisions.
“Macroeconomic Impacts of LNG Exports from the United States,” NERA Consulting, http://news.heartland.org/sites/default/files/eia_nera_nat_gas_exports.pdf