By Kenneth B. Medlock III, Adrian Cooper, Michael Kleiman and Scott Livermore
Key Findings:
Rising liquefied natural gas (LNG) exports are associated with a net increase in domestic natural gas production. The study finds that the majority of the increase in LNG exports is accommodated by expanded domestic production rather than reductions in domestic demand.
As exports increase, the spread between U.S. domestic prices and international benchmarks narrows. In every case, greater LNG exports raise domestic prices and lower prices internationally. The majority of the price movement (in absolute terms) occurs in Asia.
The overall macroeconomic impacts of higher LNG exports are marginally positive, a result that is robust to alternative assumptions for the U.S. natural gas market. With external demand for U.S. LNG exports at 20 billion cubic feet per day (Bcf/d), the impact of increasing exports from 12 Bcf/d is between 0.03 and 0.07 percent of gross domestic product (GDP) over the period of 2026–2040, or $7–$20 billion USD annually in today’s prices.
An increase in LNG exports from the United States will generate small declines in output at the margin for some energy‐intensive, trade‐exposed industries. The sectors that appear most exposed are cement, concrete, and glass but the estimated impact on sector output is very small compared to expected sector growth to 2040.
Negative impacts in energy‐intensive sectors are offset by positive impacts elsewhere. Other industries benefit from increasing U.S. LNG exports, especially those that supply the natural gas sector or benefit from the capex needed to increase production. This includes some energy‐intensive sectors and helps offset some of the impact of higher energy prices.
Read “The Macroeconomic Impact of Increasing U.S. LNG Exports” here.
The second study, conducted by the Energy Information Administration in 2014, is available here.
