Long-term liquefied natural gas (LNG) export volumes from the United States will probably not be large, and its effect on domestic gas prices will also be negligible, a new paper from Rice University argues.
The paper, “US LNG Exports: Truth and Consequence,” from Rice’s Baker Institute for Public Policy, said policy makers have considered the question of US LNG exports from the wrong perspective. They have assumed a level of future exports without accounting for the international market reaction, said Kenneth Medlock, an adjunct professor in Rice’s Department of Economics, and the author of the paper, which was published this month.
Policy makers such as the US Energy Information Administration, the Deloitte Center for Energy Solutions, and RBAC must consider the issue in terms of licensing capability instead of assuming a level of exports without accounting for the international market reaction, Medlock said. It must be considered in the context of international trade because market interactions will influence price movements and trade volume, he said.
The shale production boom in North America has changed the global outlook for LNG and heightened commercial aspirations for would-be US LNG exporters. In turn, there has been concern that increased US LNG exports would drive up the price of domestic gas.