Recent rapid technological advances have put the US in a prime position to profitably export natural gas, yet opponents fear these exports will seriously harm US consumers and manufacturers. As a US House of Representatives Energy and Power Subcommittee hearing on US energy abundance got underway on Tuesday, a group of experts gathered at AEI to debate the same issue: the merits and follies of restricting US exports of liquefied natural gas (LNG).
AEI's panel exemplified the vigorous disagreement over LNG exports. Ken Ditzel of Charles River Associates supported export restrictions, concluding that while LNG exports benefit the US economy, the use of gas for domestic manufacturing benefits the US economy even more. NERA's David Montgomery advocated for unrestricted trade and ascribed the LNG controversy to a fight over economic rents. In his opinion, common sense should dictate free exports of a good that the US is superior at producing.
Purdue University's Wallace Tyner urged caution; in his opinion, a partial trade liberalization could have unforeseen distributional consequences. AEI's Claude Barfield pointed out that the issue lies at the intersection of economic and political interests. Indian Ambassador Nirupama Rao concluded the event by reminding the audience that the United States has been the principle advocate and beneficiary of a free global trading system for decades.
US natural gas production has increased sharply because of recent technological advances in hydraulic fracturing and horizontal drilling. As a result, domestic natural gas prices have fallen substantially below international prices and are projected to stay low. This creates an opportunity for US gas producers to export significant quantities of gas profitably.
But critics fear that such exports would reduce domestic supplies and raise domestic prices, harming US consumers. They therefore argue that gas exports should be limited or prohibited. This event will explore the policy arguments from both perspectives and feature a luncheon address by Indian Ambassador Nirupama Rao, who has been an advocate for US natural gas exports.
If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.