Skip to main content
Home

Main navigation

  • Centers & Programs
    • Centers
      • Center for Energy Studies
      • Center for Health and Biosciences
      • Center for the Middle East
      • Center for Public Finance
      • Center for the U.S. and Mexico
      • McNair Center
      Center for Energy Studies
      Providing new insights on the role of economics, policy and regulation in the performance and evolution of energy markets.
      More Details
      The globe at night, lights in populated areas illuminated
      Center for Health and Biosciences
      Advancing data-based policies that promote health and well-being in the U.S. and around the world.
      More Details
      Female healthcare worker lifts finger to press digital buttons featuring topical iconography
      Edward P. Djerejian Center for the Middle East
      Developing pragmatic policy approaches to the region’s enduring political, economic and societal concerns.
      More Details
      Topographic map of Middle East
      Center for Public Finance
      Delivering research and analysis on the effects of major U.S. fiscal policies.
      More Details
      Stack of coins with mathematical figure overlays
      Center for the U.S. and Mexico
      Strengthening the binational relationship by addressing major concerns on both sides of the border.
      More Details
      Textured flags of America and Mexico
      McNair Center for Entrepreneurship and Economic Growth
      Providing actionable policy analysis and recommendations that aim to expand the economy through private enterprise.
      More Details
      Professionals gather around a large table with laptops, printed documents and coffee cups for a business meeting
    • Programs
      • China Studies
      • Drug Policy
      • International Economics
      • Presidential Elections
      • Religion & Public Policy
      • Science & Technology Policy
      • Space Policy
      China Studies
      Analyzing the influence of the transnational circulation of people, technologies, commodities and ideas in China.
      Read More
      Person walks alongside large banner with Chinese characters
      Drug Policy
      Pursuing research and open debate to develop pragmatic drug policies based on common sense and driven by human rights interests.
      Read More
      Marijuana
      International Economics
      Studying timely issues in global economic policy as well as developmental policy in foreign countries.
      Read More
      International paper currencies stacked together, showing range of colors and styles
      Presidential Elections
      Offering nonpartisan analysis of elections to better understand the changing dynamics of presidential campaigns.
      Read More
      An assortment of campaign buttons from a variety of US elections and political pursuits are displayed in a collage
      Religion and Public Policy
      Exploring how religion and cultural factors interact with public policy issues.
      Read More
      A worn path stretches between rows of olive trees
      Science and Technology Policy
      Addressing a broad range of policy issues that affect scientists and their research.
      Read More
      A scientist picks up test tubes from a rack.
      Space Policy
      Focusing on U.S. space policy and the future of space travel.
      Read More
      The International Space Station (ISS) orbits the Earth at sunrise
  • Events
    Teen Depression
    Center for Health and Biosciences | Child Health Policy
    Tue, Jun. 06, 2023 | 4 pm - 5 pm
    Baker Briefing: America’s Youth in Crisis — How Policy Interventions Can Help See Details
    Textured flags of America and Mexico
    Center for the U.S. and Mexico | Mexico Forum
    Wed, Sep. 13, 2023 | 6 pm - 8:30 pm
    Center for the US and Mexico 10th Anniversary Dinner See Details
  • Experts
    • Biomedical Research
    • Child Health
    • China
    • Conflict Resolution in the Middle East
    • Domestic Health Policy
    • Drug Policy
    • Energy
    • Entrepreneurship and Economic Growth
    • Global Health
    • Health and Biosciences
    • Human Rights and Refugees
    • International Economics
    • Islam and Politics
    • Latin American Energy
    • Middle East
    • Political Economy of the Arab Gulf
    • Presidential Elections
    • Public Finance
    • Religion and Public Policy
    • Science and Technology
    • Space Policy
    • Texas Politics
    • U.S. and Iran
    • U.S. and Mexico
    • See All Experts
    • Experts in the News
  • Support
    • Join the Baker Roundtable
      Join the Baker Roundtable
      Learn more about the Baker Institute’s membership forum, which supports the mission of the institute and offers members exclusive access to experts and events.
      Read More
      RT
    • Major Gifts
      Major Gifts
      Major gifts provide the funds necessary for the Baker Institute to explore new areas of study and research, and expand current programs.
      Read More
      Wallace S. Wilson meeting with former British Prime Minister Tony Blair
    • Endowments
      Endowments
      Endowment gifts provide the Baker Institute with permanent resources that support research programs, fellows and scholars.
      Read More
      Pictured from left are William Martin, Katharine Neill Harris, Ambassador Edward Djerejian, Alfred C. Glassell, III, and Pam Lindberg
    • Planned Giving
      Planned Giving

      Plan a gift that will ensure lasting, meaningful support for policy programs important to you.

       

      Read More
      meeting
    • Corporate Support
      Corporate Support
      Corporations can become involved with the institute in a number of ways and see the benefit from the research conducted by our fellows and scholars.
      Read More
      Wide shot of the Doré Commons during a Shell Distinguished Lecture Series event featuring Wim Thomas
  • About
    • People
      People
      Learn more about the Baker Institute's leadership and get contact information for the administrative staff.
      Read More
      Secretary James A. Baker, III, stands with a portion of the Berlin Wall, outside of Baker Hall
    • Student Opportunities
      Student Opportunities
      Through the internships on campus and beyond, Rice students can explore careers in public policy, or simply become better informed about important issues of the day.
      Read More
      Amb. Edward P. Djerejian speaks with students outside Baker Hall
    • Annual Report
    • Podcast: Baker Briefing
      Podcast: Baker Briefing
      Baker Briefing is a weekly podcast that tackles the most critical foreign and domestic policy issues of the day in conversations with experts at the Baker Institute.
      Read More
      Logo for the Baker Briefing Podcast (Square)
    • Contact
      Contact Us
      Complete a form for event, media or other inquiries, and get directions and parking information for the Baker Institute.
      Read More
      The front of Baker Hall, from across the plaza, with fountain in foreground
  • Contact
  • Research
    • Economics & Finance
      Economics & Finance
      Read More
    • Energy
      Latest Energy Research
      Summary on Latest Energy Research
      Read More
    • Foreign Policy
      Foreign Policy
      Read More
    • Domestic Policy
      Domestic Policy
      Read More
    • Health & Science
      Health & Science
      Read More
    • All Publications
  • Facebook
  • Youtube
  • Twitter
  • Linkedin
  • Economics & Finance
  • Energy
  • Foreign Policy
  • Domestic Policy
  • Health & Science
  • All Publications
Center for Energy Studies | Research Paper

U.S. LNG Exports: Truth and Consequence

August 10, 2012 | Kenneth B. Medlock III
Globe showing Americas

Table of Contents

Author(s)

Headshot of Kenneth Medlock
Kenneth B. Medlock III
James A. Baker, III, and Susan G. Baker Fellow in Energy and Resource Economics | Senior Director, Center for Energy Studies
Read More

Share this Publication

  • Facebook
  • Twitter
  • Email
  • Linkedin
  • Download PDF
  • Print This Publication

To access the full paper, download the PDF on the left-hand sidebar.

Abstract

A decade ago, market players were making large capital investments to facilitate the import to the United States of liquefied natural gas (LNG) from distant locations, such as the Middle East, Africa, and Russia. This was predicated on the consensus at the time that U.S. domestic supply was becoming increasingly scarce. However, innovations involving hydraulic fracturing and horizontal drilling subsequently led to the dramatic growth of domestic production from shale gas. In fact, domestic production growth has been so strong that the U.S. is considered a possible exporter of LNG—an unthinkable notion just a few years ago. This new consensus is fueled by the current reality—one that features abundant supplies and low prices in North America relative to the rest of the world. Importantly, the commercial aspirations of firms that seek to seize the apparent profit opportunity offered by exports run headlong into concerns that allowing exports from the U.S. will force prices up, thereby negatively impacting industrial activity and household budgets. Hence, the issue of allowing LNG exports from the U.S. has entered the political realm.

Several groups—such as the U.S. Energy Information Administration, the Deloitte Center for Energy Solutions, and RBAC—have studied the impact of U.S. exports on domestic prices. These studies generally assume a particular volume of LNG exports from the U.S. when assessing the domestic price impact, but they do not allow interaction between domestic and international markets to influence the volume of trade. U.S. LNG exports will occur in a global setting, so it is an international trade issue. Thus, to separate truth from fiction one must apply the appropriate analytical framework grounded in international trade. Specifically, domestic market interactions with the market abroad will determine export volumes and therefore U.S. domestic price impacts.

After introducing a basic international trade framework, the consequences of U.S. LNG exports are discussed. This paper argues that (a) the impact on U.S. domestic prices will not be large if exports are allowed, and (b) the long-term volume of exports from the U.S. will not likely be very large given expected market developments abroad. The bottom line is that certification of LNG exports will not likely produce a large domestic price impact, although the entities involved may be exposed to significant commercial risk.

 

 

This material may be quoted or reproduced without prior permission, provided appropriate credit is given to the author and Rice University’s Baker Institute for Public Policy. The views expressed herein are those of the individual author(s), and do not necessarily represent the views of Rice University’s Baker Institute for Public Policy.

© 2012 by the James A. Baker III Institute for Public Policy of Rice University
  • Print This Publication
  • Share
    • Facebook
    • Twitter
    • Email
    • Linkedin

Related Research

United Arab Emirates map
Center for Energy Studies | Edward P. Djerejian Center for the Middle East | Research Paper

Should Abu Dhabi Quit OPEC? Reconsidering the UAE’s Membership

Read More
Global connections span the continents; focus on the Americas
Center for Energy Studies | Latin American Energy | Podcast

Baker Briefing: Latin American Energy and Politics

Read More
China Map
Center for Energy Studies | Commentary

How Long Will it Take for China’s Nuclear Power to Replace Coal?

Read More
  • Facebook
  • Youtube
  • Twitter
  • Linkedin
  • Donate Now
  • Media Inquiries
  • Membership
  • About the Institute
  • Rice.edu
Contact Us

6100 Main Street
Baker Hall MS-40, Suite 120
Houston, TX 77005

Email: bipp@rice.edu
Phone: 713-348-4683
Fax: 713-348-5993

Baker Institute Newsletter

The email newsletter of Rice University's Baker Institute for Public Policy provides a snapshot of institute news, research and upcoming events.

Sign Up

  • © Rice University's Baker Institute for Public Policy
  • Web Accessibility
  • Privacy Policy