Abstract
With the recent shale gas boom, the U.S. is expected to have very large natural gas resources. In this respect, the key question is would it be better to rely completely on free market resource allocations which would lead to large exports of natural gas or to limit natural gas exports so that more could be used in the U.S.. After accounting for the cost of liquefying the natural gas and shipping it to foreign markets, the current price difference leaves room for considerable profit to producers from exports. In addition, there is a large domestic demand for natural gas from various sectors such as electricity generation, industrial applications, and the transportation sector etc. A hybrid modeling approach has been carried out using our version of the well-known MARket ALlocation (MARKAL)-Macro model to keep bottom-up model richness with macro effects to incorporate price and gross domestic product (GDP) feedbacks. One of the conclusion of this study is that permitting higher natural gas export levels leads to a small reduction in GDP (0.04%–0.17%). Higher exports also increases U.S. greenhouse gas (GHG) emissions and electricity prices (1.1%–7.2%). We also evaluate the impacts of natural gas exports in the presence of a Clean Energy Standard (CES) for electricity. In this case, the GDP impacts are similar, but the electricity and transport sector impacts are different.
Highlights
The aim of this study is to examine the likely economic and environmental impacts of increasedU.S exports of natural gas
The main problem is would it be better to trust solely free market resource allocations which would result in significant level of natural gas exports or to limit natural gas exports so that more could be used in the U.S Exports would be economically profitable due to the significant price difference at present between U.S natural gas price (around $3.50/million cubic feet (MCF) in 2010, or $2/MCF in 2016) and prices in foreign markets (e.g., Japanese liquefied natural gas (LNG) Market), which can range up to $15/MCF
We will report on gross domestic product (GDP), primary resourceother mix, electricity sector price and changes, transport sectorresults impacts, impacts on selected sectors, and impacts on generation domestic greenhouse gas (GHG)
Summary
The aim of this study is to examine the likely economic and environmental impacts of increasedU.S exports of natural gas. With the current shale gas boom, the U.S is expected to have very large natural gas resources. This is true even considering the current low oil and natural gas prices. The main problem is would it be better to trust solely free market resource allocations which would result in significant level of natural gas exports or to limit natural gas exports so that more could be used in the U.S Exports would be economically profitable due to the significant price difference at present between U.S natural gas price (around $3.50/million cubic feet (MCF) in 2010, or $2/MCF in 2016) and prices in foreign markets (e.g., Japanese liquefied natural gas (LNG) Market), which can range up to $15/MCF. After accounting for the cost of liquefying the natural gas and shipping it to foreign markets, price difference leave room for considerable profit from exports
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