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Should US export natural gas? Study for DOE fuels fiery debate.

According to the study, global market conditions are not yet ripe for US natural gas exports, but when they are, the exports would benefit the economy. A key issue is how that benefit is shared.

By Staff writer / December 6, 2012

In this file photo, crew members with Anadarko Petroleum Corp., work on a drilling platform on a Weld County farm near Mead, Colo. A Department of Energy study considered the idea of exporting the US supply of natural gas.

Ed Andrieski/AP/File


One of the key energy battles of the next decade is emerging now: what to do with the new natural gas geyser now whooshing onto the domestic US energy market. Keep it at home, or export a big part overseas?

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It's hardly an academic question. Companies are lining up for federal permits to build at least nine liquefied natural gas (LNG) facilities that would allow that US energy resource to be shipped overseas. Opposing them are environmentalists, members of Congress, and some industry groups worried it will mean higher energy costs for US consumers and manufacturers and potentially the loss of some jobs.

Debate over the issue popped up briefly in Congress this year, but was swamped by a deluge of other election issues. Even though energy policy was a centerpiece of both presidential campaigns, neither Mitt Romney nor President Obama ever unpacked for the public the potentially explosive LNG export issue.

Is it wise to sell the US gas surplus abroad if it ends up hiking energy prices at home? Which sectors of the economy would be winners – or losers? What would be the impact on domestic energy prices and the economy overall?

Answers to those questions are now emerging. According to a much-anticipated new study commissioned by the US Department of Energy and released late Wednesday, the US would get a net overall positive economic boost from exporting a big fraction of its domestic natural gas resources to Asia and other energy-hungry global markets. But that’s only if global market conditions make such exports feasible, which is not currently the case, according to the study.

The study for the DOE, by the NERA Economic Consulting of Washington, said the US economy would benefit under all future scenarios in which exports are envisioned. The Energy Department says, meanwhile, it will evaluate the study along with other information.

"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,” the study found. “In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports."

But while the study projects $47 billion in increased economic activity by 2020, it also goes on to detail that this largesse will not be doled out equally, saying there would be "winners and losers."

"Different socioeconomic groups depend on different sources of income, though through retirement savings an increasingly large number of workers share in the benefits of higher income to natural resource companies whose shares they own," the study found. "Nevertheless, impacts will not be positive for all groups in the economy. Households with income solely from wages or government transfers, in particular, might not participate in these benefits."

Even so, overall "net benefits" from such exports to the economy overcame “the losses from reduced capital and wage income to US consumers," it found. "LNG exports have net economic benefits in spite of higher domestic natural gas prices,” the firm concluded.


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