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

There are limits, however. For instance, according to the study's conclusions:

• Under current economic conditions, there is not enough supply in the US, or demand overseas, to make LNG exports a reality. Of course, that's projected to change as demand increase overseas and shale-gas production costs in the US fall further. Still, the study said, "under status quo conditions in the world and the US ... there is no feasible level of exports possible from the US.”

• US natural gas prices would not suddenly rise to the level of world prices, as some analysts fear, the study says. Instead, "US exports will drive prices down in regions where US supplies are competitive."

• Overall consumer wellbeing in the US improves under all LNG export scenarios. Welfare improvement is highest under the high export volume scenarios because US consumers benefit from an increase in wealth transfer and export revenues." 

Among the winners, the study says, would be natural gas producers, who would see broadly positive income gains. But losers would include those US manufacturers with big energy expenditures and big exposure to foreign competition. Companies with those characteristics employ about one-half of one percent of US workers, including in the chemical, fertilizer, cement, paper, glass, and other industries.

Kevin Book, energy analyst with ClearView Energy Partners, an energy market research firm, writes that for users of natural gas, the “largest price increases that would be observed after [five] more years of potentially growing exports” would be somewhere between 22 cents and $1.11 per thousand cubic feet of gas, according to the study. That's good news for “owners of natural gas resources” and investors in those gas producers, Mr. Book writes, but negative for households that depend on government assistance and households without investments.

“Perhaps unreassuringly, the study states that ‘wage income never falls short of baseline levels by more than 1 percent in any year or any industry in any scenario.’ Opponents might read this as: “In some scenarios, LNG exports reduce wages by 1 percent,” Book notes in his analysis.

For energy-intensive manufacturing companies, the study projects maximum output losses of between 0.2 percent and 0.8 percent. There is a downside for the energy sector, too, where natural gas is becoming more and more important for generating electricity.

Such impacts are not likely to be taken lightly, and the political fight over whether to export natural gas promises to ignite next year. Officials at DOE were keeping the study at arms length, noting that the agency “does not take a position regarding these findings at this time.”

Others, however, were not so reserved. Shipping LNG overseas could increase US consumer prices for natural gas 36 percent to 54 percent by 2018, said the Industrial Energy Consumers of America in a statement. Natural gas exports would also increase electricity costs from 2 to 9 percent, the group said.

“By anyone’s measure, these are substantial cost increases”, said Paul Cicio, President of the IECA said in a statement.

Some in Congress applauded the report.

“The administration should be commended for commissioning such a comprehensive and transparent review of the potential impacts of exporting natural gas,” Sen. Lisa Murkowski (R) of Alaska said in a statement. “It’s clear from the study that exporting LNG would be beneficial to the U.S. economy, and the greater the level of exports, the greater the benefit.”

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