LNG exports could increase production and price of gas, report says

 LNG exports could increase production and price of gas, report says

Liquefied natural gas exports could mean more gas production, more economic growth and an increase in consumer prices, according to a government analysis.

The report, released at the end of October and rehashed Wednesday in a subsequent analysis, is intended to serve as a yardstick to help evaluate applications to export LNG from the United States. Those permits require the export project to be in the public interest.

The analysis presented several different scenarios where the U.S. exported LNG, ranging from exporting a cumulative 30.6 trillion cubic feet by 2040 to a high of 101.6 trillion cubic feet of LNG exports.

In a summary, the report concluded that increasing LNG exports of natural gas would lead to higher domestic natural gas prices. The increase could be between 4 percent in 12 percent for the price producers receive depending on how much gas is exported. The prices that residential customers would pay are expected to see less of an increase at between 2 percent and 5 percent.

The boost to prices and added demand from exports would also incentives additional production of the gas. The analysis suggested that between 61 percent to 84 percent of the increase in natural gas demand from LNG exports would be satisfied by additional production.

The gap between supply and demand opened by exporting LNG would further be closed as consumers bought less of the commodity at higher prices. On average, from 2015 to 2040, natural gas bills paid by end-use consumers in residential, commercial and industrial sectors combined could increase by between 1 percent and 8 percent depending on how much gas is shipped abroad. The Energy Information Administration estimated that electricity generation would shift generation toward other sources such as coal and renewables. That could mean an electricity bill increase of between 0 percent and 3 percent across the same sectors.

At somewhat of the bottom line, the report said, U.S. LNG exports would result in a higher United States gross domestic product. Economic gains could measure between 0.05 percent and 0.17 percent, and would increase with the amount of LNG exported. The report also noted that this analysis was focused on the domestic economy and the energy industry, and left out several factors that could increase economic benefits.


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