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Benefits of Natural Gas Exports Outweigh the Costs

December 2012
A study conducted by NERA Economic Consulting in Washington, D.C., finds that exporting natural gas would benefit the U.S. economy even if it led to higher domestic prices for the fuel. The study was commissioned by the Energy Department to help guide officials as they decide whether to approve 15 liquefied natural gas export applications now under.

Companies hope to export U.S. natural gas because it is at least half as costly as natural gas in Europe and Asia. However, consumers and manufacturers that use natural gas as a raw material or fuel source are opposed to exporting for fear that it will drive up prices for residents and increase manufacturing costs. Environmental groups are also opposed to increased exporting because it would increase the use of hydraulic fracturing — or fracking — a method of extracting oil and gas that they is contaminating the ground water.

Although the NERA study did confirm that increased exporting would push up natural gas prices, it noted that "serious impact" would be limited to companies with a high exposure to foreign competition and energy bills greater than 5 percent of their output costs. The study further noted that natural gas exports would help reduce the country's trade imbalance and increase U.S. household income. Additionally, natural gas producers would benefit from higher prices and economic activity would increase with additional drilling.

"Exports can help grow the country's economy, help reverse our trade deficit, and help bring back millions of U.S. jobs in engineering, manufacturing, construction and facility operations," said Erik Milito, group director for Upstream and Industry Operations at the American Petroleum Industry, an oil and gas lobbying group.

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