The Long awaited LNG export study commissioned by U.S. Department of Energy was released yesterday (http://www.fossil.energy.gov/programs/gasregulation/reports/nera_lng_report.pdf). The results were not surprising, LNG exports will benefit the overall U.S. economy:
“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. In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports.
In all of these cases, benefits that come from export expansion more than outweigh the losses from reduced capital and wage income to U.S. consumers, and hence LNG exports have net economic benefits in spite of higher domestic natural gas prices. This is exactly the outcome that
economic theory describes when barriers to trade are removed.” (page 1)
LNG or other energy product exports should not be seen any different than exporting cars or corn. Wall Street Journal’s December 7 editorial (http://online.wsj.com/article/SB10001424127887324001104578163491822943984.html?user=welcome) was right on point:
“Not that the report will mute the critics, who include Massachusetts Congressman Ed Markey and Oregon Senator Ron Wyden. Mr. Markey worries that exports will allow a “massive wealth transfer from working Americans to oil and gas companies.” His economic logic seems to be that broadening the market for natural gas will raise prices for American consumers, never mind the other economic gains.
By such logic, the U.S. should never export anything because foreign buyers might bid up the price. Thus Iowa farmers should limit their corn sales to the 50 states because Chinese demand has raised corn prices. Try selling that one in Des Moines. Mr. Markey is arguing for economic autarky, which didn’t work in the Middle Ages, much less in a modern global economy in which trade has lifted tens of millions out of poverty.”
A multitude of previous economic analyses show the benefits of open borders and free trade to country’s economic prosperity, lets hope policy makers give serious consideration to the new DOE report’s finding.