Increased U.S. Exports of Liquefied Natural Gas Will Boost Economic Growth and Improve the U.S. Trade Balance

Two recent Department of Energy Studies, “Effect of Increased Natural Gas Exports on Domestic Energy Markets”1 and “Macroeconomic Impacts of LNG Exports from the United States”2 provide insight on the effect of increased U.S. exports of liquefied natural gas (LNG) and the potential impact on domestic natural gas prices and the overall U.S. macroeconomy. The results of DOE’s macroeconomic study, which was prepared by NERA Economic Consulting, are in line with well-known facts regarding the merits of free trade: “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 is exactly the outcome that economic theory describes when barriers to trade are removed.”3

 

ACCF Comments for DOE on LNG Exports Jan 24 2013