A recent federal study found that allowing U.S. LNG exports to flow unconstrained by anything but global demand would produce salutary economic effects, but an industrial energy consumer group warned that such a policy would send U.S. gas prices skyrocketing and threaten the public interest.
"The study's most likely scenario assumes that LNG exports up to 30.7 Bcf/d could increase prices 117 percent above today's Henry Hub prices by 2040," Industrial Energy Consumers of America President Paul Cicio wrote in a July 27 letter to the U.S. Department of Energy. "Such price hikes plainly threaten the plentiful supply of natural gas at reasonable prices for domestic consumers."
The June report, prepared by NERA Economic Consulting for the DOE's Office of Fossil Energy, calculated that U.S. LNG exports would range between 8.7 Bcf/d and 30.7 Bcf/d in 2040 and that the domestic economic benefits would outweigh negatives, including higher natural gas prices, in the long term. But, Cicio said, the U.S. Supreme Court requires the DOE's natural gas export authorizations to promote reasonable domestic gas prices to pass the "public interest" test, indicating that NERA's scenario would violate the Natural Gas Act.
While NERA found that there would be economic benefits of unconstrained LNG exports in terms of gross domestic product and profits shared with consumers, Cicio noted that the Supreme Court's public-interest definition focuses on "impacts to people, not GDP," and that only a fraction of Americans would reap any "meaningful income" from LNG exports.
"Only 52 percent of U.S. adults own shares in stock equities. And ... oil and gas-related stock equities are approximately less than 5 percent of total U.S. stock equities," Cicio said in the letter.
The energy sector's efforts to bypass U.S. tariffs on foreign steel, Cicio continued, implies that NERA overestimated the number of jobs that increasing LNG exports creates. "The oil and gas industry and those building LNG terminals admit that they are against President Trump's steel tariffs. ... Because they are importing the majority of the steel," he wrote.