Price and Economic Impacts of an Accelerating Export Industry: LNG Impact Study – Phase 4

Growing exports of U.S. liquefied natural gas (LNG) are now on track to support 550,000 jobs annually and contribute $1.4 trillion to U.S. gross domestic product through 2040—exceeding previous expectations—while having a negligible impact on domestic gas prices. US LNG feedgas demand is expected to double to 36 bcf/d in the next five years – 25% higher than our previous Base Case projections.

The United States, already the world’s leading LNG supplier, is expected to surpass a one-third share of the global market during this time. This shifting dynamic will almost certainly make LNG exports the second largest net export industry in the United States within the next five years, second only to U.S. civilian aircraft and parts.

S&P Global Energy now estimates that total investment in the LNG supply chain through 2040 will exceed $1 trillion. In addition to the increased jobs and GDP gains, the new study expects future LNG export activity to generate more than $2.9 trillion in total revenues for U.S. businesses, $206 billion in federal and state tax revenues and nearly $630 billion in labor income. The economic impact extends far beyond core gas-producing states, with 42% of jobs and 33% of GDP contributions occurring in non-gas- producing areas.

Notably, these economic benefits occur while the impact on U.S. domestic natural gas prices is negligible. S&P Global Energy projects an average increase in end-user gas costs of just 1.6% per household from 2026 to 2031. The United States domestic natural gas prices will continue to rank among the lowest in the world for both the residential and industrial sectors.

Facilitating these benefits is the world’s most interconnected gas infrastructure network, with more than 300,000 miles of natural gas transmission pipelines. The annual volume of natural gas transported through the US pipeline system exceeds the combined consumption of 130 countries. Nevertheless, key regional bottlenecks still remain. The shale gas revolution and abundance of the U.S. natural gas resource base have shifted the domestic market dynamic to a new paradigm where infrastructure constraints are often the key driver of higher-priced regional markets and price volatility. This study contemplates the potential impacts of easing and stressing pipeline bottlenecks to the US Northeast to highlight the market implications of such bottlenecks.

Importantly, US LNG exports are increasingly playing a role in geopolitics and have increased US flexibility in international relations. For example, the EU aims to ban Russian LNG and pipeline gas by Q4 2027. Without US LNG exports, it would be challenging to implement such restrictions due to the lack of near-term alternatives and existing underutilized connectivity between Russia and the EU. In an “Extended Pause” scenario, international prices would face significant increases, value would be transferred to non-US suppliers of LNG and other fossil fuels, including coal, and the US would face a loss in confidence in its reliability as a trade partner.

The resiliency of the US domestic gas market in light of external market shocks, e.g. Henry Hub prices have remained flat during the Iran conflict as LNG spot prices doubled, benefits not only US households via affordable natural gas costs, but also benefits trading partners by providing reliable volumes insulated from shocks. However, the wide reaching economic benefits and growth potential from US LNG are at risk from policy derailment, and if an “Extended Pause” scenario were to emerge, trading partners would also face higher natural gas costs.