One argument being made against the export of U.S. liquefied natural gas (LNG) is that exports might create a domestic natural gas shortage, harming consumers and industries that use natural gas to make things or to power their operations. The chart below shows that this line of attack is just fear mongering:
The bars on the left reflect the current U.S. natural gas resource base (overall and the portion from shale) as estimated by the U.S. Energy Information Administration (EIA) and energy consulting firm ICF International. On the far right is EIA’s projection of total domestic natural gas consumption over the next two decades. (Barely visible is a projection of U.S. LNG exports, 2015-2035.)
Obviously, EIA’s projection for U.S. consumption is dwarfed by both estimates of our natural gas reserves – it’s only 25.7 percent of EIA’s reserve estimate and just 16.1 percent of ICF’s. A Brookings Energy Security Initiative study notes:
“… the United States consumed just over 24 tcf of gas in 2010, suggesting that the estimates for the shale gas resource alone would be enough to satisfy between 25 and 80 years of U.S. domestic demand.”
“… geological evidence suggests that the volumes of LNG export under consideration would not materially affect the availability of natural gas for the domestic market.”
Bottom line: This isn’t a picture of an impending U.S. natural gas shortage. Meanwhile, export opponents seem to miss a fundamental principle of free-market economics: When a domestic commodity – whether natural gas, wheat, machinery or computer products – can find available markets, the demand helps stimulate more domestic production of the commodity. More production means more jobs and expanded investment in facilities and operations. America wins.
API President and CEO Jack Gerard:
“America’s newfound abundance of natural gas resources is a boon to all domestic manufacturing through lower energy costs, lower costs on raw materials and reduced heating bills. Restricting exports of energy as a ‘strategic resource’ makes no more sense than unnecessarily restricting the export of chemicals, agriculture products or cars …”
The overall economic argument for LNG exports is strong. The NERA study conducted for the Energy Department concluded that U.S. GDP would grow between $5 billion and $47 billion by 2020, depending on how much natural gas is exported.
Of course, GDP growth, jobs and additional capital spending all depend on leadership that recognizes America’s energy wealth and implements policies to develop that wealth, creating jobs and broader economic activity in the process. This includes allowing LNG exports. API Chief Economist John Felmy:
“Allowing our oil and natural gas companies to supply other markets through exports is indisputably in our national interest, and the U.S. Department of Energy should approve pending applications for authorization to export natural gas without delay.”