NCPA - National Center for Policy Analysis

Exporting Natural Gas a Boon to United States despite Price Hikes

December 10, 2012

A major new study for the U.S. Department of Energy supports controversial efforts to send natural gas to foreign nations, a conclusion that could push the president to approve exports over the objections of those who say it would hurt the country, says McClatchy.

America's new energy bonanza is the natural gas found in shale rock, and there's a heavy push to build terminals where it can be liquefied and exported. The natural gas industry says exports will boost the economy. But opponents argue that exports will drive up prices in the United States and are bad for American consumers, manufacturers and energy security.

Foreign nations are thirsty for America's natural gas.

  • Exports are restricted except for those countries -- mostly in North and Central America -- where the United States has special free trade agreements.
  • The federal government has approved major overseas exports so far from just one project, Cheniere Energy's 2 billion-cubic-feet per-day project on the Gulf Coast of Louisiana.
  • There are more than a dozen other applications for export projects, but the government has held off on them while it awaited the results of this study, which looked at what the impacts of different levels of liquefied natural-gas exports would be on the economy.

The study says exports would raise energy prices in the United States. But it concluded that "these costs are more than offset by increases in export revenues along with a wealth transfer from overseas received in the form of payments for liquefaction services. The net result is an increase in U.S. households' real income and welfare."

Massachusetts Rep. Edward Markey disagrees. Markey, the top Democrat on the House Natural Resources Committee, says the study supports his arguments that exports could drive up U.S. prices by 30 percent.

Source: Sean Cockerham, "Study: Exporting Natural Gas a Boon to United States despite Price Hikes," McClatchy, December 5, 2012.


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