Should the U.S. Limit Exports of Natural Gas?

NO: Increasing Exports Will Have a Positive Economic Impact. By Anna Mikulska in The WSJ. She is a nonresident fellow in energy studies at Rice University’s Baker Institute for Public Policy.

"To start, the U.S. already exports many manufactured goods, services, oil, refined products, chemicals and agricultural goods to NFTA countries. There is no reason to treat LNG differently. Shipping LNG is a commercial transaction, not a reward. If the U.S. doesn’t export its LNG, the NFTA countries will find other suppliers, including Australia, Qatar, Russia, Mozambique and possibly even Iran. 

Advocates of limiting exports are concerned about depleting domestic supply and triggering an increase in domestic prices, to the detriment of U.S. manufacturing competitiveness.

But even if exports were to grow to six times their 2016 levels by 2018, they will constitute only about 4% of total U.S. production. And to achieve these levels, U.S. producers must remain competitive in global markets—in other words, domestic prices of natural gas have to remain relatively low.

Though it is true that increasing LNG exports will push domestic prices up, the impacts are modest. A 2015 Energy Department study on the macroeconomic impact of increasing LNG exports finds that LNG exports have a net positive impact on U.S. GDP. And U.S. industries reliant on natural gas grow under all LNG export scenarios, even if at a slightly lower rate.

Indeed, the U.S. natural-gas abundance has already had a profound impact on gas-intensive industries, and long-term investments are proceeding in parallel with continuing construction of LNG export capacity. The American Chemistry Council estimated that shale development as of July has triggered 310 chemical-industry projects (completed, started or projected). These projects are associated with an expected $185 billion in new capital investment, 464,000 direct and indirect jobs, and $26 billion in new tax revenue through 2025.

Critics might look at selective years and narrow job descriptions to try to argue that LNG exports won’t contribute much to job growth. But more than 61,000 jobs were created in the extraction of oil and gas between 2004 and 2017. And if one looks at Bureau of Labor Statistics for extraction, drilling and support activities in the oil-and-gas industry, more than 162,000 jobs were created between 2007 and 2012.

If restrictions were imposed on LNG exports, only a few domestic manufacturers would gain a small advantage, while the broader benefits to the rest of the economy would be lost. Restrictions would weaken the U.S. position in bilateral and multilateral trade discussions and reduce any foreign-policy benefit that could be derived from a growing U.S. role in the global energy market."