Macroeconomic Impacts of LNG Exports from the United States

by Sabrina I. Pacifici on December 8, 2012

Macroeconomic Impacts of LNG Exports from the United States, December 2012

  • “This report contains an analysis of the impact of exports of LNG on the U.S. economy under a wide range of different assumptions about levels of exports, global market conditions, and the cost of producing natural gas in the U.S. These assumptions were combined first into a set of scenarios that explored the range of fundamental factors driving natural gas supply and demand. These market scenarios ranged from relatively normal conditions to stress cases with high costs of producing natural gas in the U.S. and exceptionally large demand for U.S. LNG exports in world markets. The economic impacts of different limits on LNG exports were examined under each of the market scenarios. Export limits were set at levels that ranged from zero to unlimited in each of the scenarios. 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.”
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