On December 5 the U.S. Department of Energy released its analysis of the impact of liquified natural gas (LNG) exports to countries without free-trade agreements with the U.S., which include Japan, China and India.The report is available at www.fossil.energy.gov/programs/gasregulation/LNGStudy.html.
The Energy Department has automatically approved about a dozen natural gas export permits for exports to countries that have a free-trade agreement with the U.S.
For countries that do not have a free-trade agreement with the U.S., the Department of Energy is required to grant applications for export authorizations unless the Department finds that the proposed exports “will not be consistent with the public interest.” Factors for consideration include economic, energy security, and environmental impacts.
In order to guide decisions on the 15 current, and any future export requests, the Energy Department scheduled an impact analysis prior to making decisions on the applications.
The Energy Department analysis was released on December 5. The report concedes that exporting natural gas will raise the price of the fuel but that it will still yield broad domestic economic benefits. Across all of the scenarios it analyzed, the report concludes, “the U.S. was projected to gain net economic benefit from allowing [liquid natural gas] exports. Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of … exports increased.… 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 … 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.”
To comment on the draft report send an e-mail to LNGStudy@hq.doe.gov, including “2012 LNG Export Study” in the title line. The Department will accept comments on the report through 4:30 pm EST, January 24, 2013. All comments will be posted at www.fossil.energy.gov/programs/gasregulation/LNGStudy.html.