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Exports cause natural gas price to double

Hydrocarbon Engineering,

On 29 October, the US Energy Information Administration (EIA) released a study on the price impacts of exporting LNG titled: ‘Effect of Increased Levels of Liquefied Natural Gas Exports on US Energy Markets’.

The study was order by the Department of Energy (DoE) as part of an update of the previous EIA and NERA Economic Consulting studies from 2012. Before DOE can grant approval to export applications that take the total amount exported about 12 billion ft3/d, they must conduct studies to determine the price impact to show that exports have net benefits to the US economy.

The American Public Gas Association (APGA) explains that the 2014 EIA study examined the impact of US energy markets of exporting 12, 16, and 20 billion ft3/d of natural gas from the lower 48 states under various scenarios. These include high oil and gas resource cases, low resource cases, high export scenarios, and a reference case to capture the potential impacts using standard assumptions about federal policy and the domestic market’s response. The study concluded that exports generate higher economic output, which outweighs any price impacts caused by exports. However, as APGA has continually argued, the study shows that ‘increased LNG exports lead to increased natural gas prices’, and that the study also found that the domestic price of natural gas in the reference case, ‘more than doubles between 2013 and 2040’.

The consequences of the price of gas more than doubling are also clear: reduced disposable income for families, lower return on capital investment, lower wages for workers, and job losses for almost every sector of the US economy other than the natural gas production sector and exporters.

APGA will continue to argue that for the above reasons, the US should prohibit exports and focus on implementing domestic pro natural gas policies.

Adapted from a press release by Emma McAleavey.

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