The People of America's Oil and Natural Gas Indusry

LNG Exports, Global Leverage, U.S. Security

Mark Green

Mark Green
Posted September 23, 2014

New analysis from Columbia University says exporting U.S. liquefied natural gas (LNG) will increase global supply and ultimately help counter Russia’s attempts to leverage its natural gas customers in Europe and elsewhere.

votersCo-authors Jason Bordoff and Trevor Houser write that even before America starts exporting significant volumes of LNG, our domestic shale energy surge is having an effect abroad:

… the US shale gas boom has already helped European and other gas consumers and hurt Russian gas producers by freeing up LNG imports the United States was projected to need before the advent of the shale revolution. … (T)he additional global gas supply that has resulted from the US shale boom has strengthened Europe’s bargaining position with Russian suppliers. US LNG export terminals already approved and under development will continue to improve that negotiating power and provide the region with more supply options. Additional LNG terminals, were they to be approved, financed and constructed, would have an even greater effect …

Bordoff, director of Columbia’s Center for Global Energy Policy and former White House advisor, and Houser, visiting fellow at the Peterson Institute for International Economics and a former State Department senior advisor, continue:

There are a number of reasons for US policy makers and the public to support US LNG exports. … (A) significant increase in global supply projected by the end of the decade will create a more liquid, diverse global gas market. … This will allow for more competition in the global market, putting downward pressure on prices and giving gas-importing nations more leverage with traditional suppliers.

Even if most of the U.S. LNG that’s eventually exported goes to Asian markets, Bordoff and Houser write, American energy will grow the overall global supply:

Even if not a single drop of US LNG finds its way to Europe, however, additional US LNG exports will impact European gas markets. Expanding the amount of LNG available globally will further increase consumer leverage in price negotiations and put downward pressure on global gas prices. And the more US gas Asian customers purchase, the less gas they buy from other LNG suppliers, expanding the set of non-Russian options available in Europe.

All of these are positives for America from the export of U.S. LNG. The Columbia report outlining energy security and foreign policy impacts from LNG exports follows earlier studies (ICF and NERA for the Energy Department) making the economic case for exports.

The wild card is whether the United States will choose to harness its natural gas wealth and become a major player in the global market. This chiefly depends on the degree to which Washington will get out of the way so that LNG export infrastructure can go forward, allowing U.S. LNG to reach market.

Though the federal government recently gave final approval for two export projects, one waited nearly two years to clear the federal bureaucracy and the other waited nearly three years. Meanwhile, dozens more remain on hold. While the Energy Department made changes in the approval process earlier this year, they haven’t increased the pace of the department’s approvals.

The loser is America, which as the world’s No. 1 producer of natural gas should be among the world’s leading exporters of natural gas. The global natural gas market is developing while Washington tries to manage supply-and-demand dynamics that are best left to the free market.

The Columbia report adds more weight to the case for U.S. LNG exports – an argument that exports would add to the global supply while helping strengthen America’s foreign policy hand. The impacts of America’s energy revolution already are being felt internationally. LNG exports will create supply alternatives for our allies while helping prevent the use of energy as a tool of domination. API President and CEO Jack Gerard, during a recent interview with Bloomberg TV:

“The United States has the ability to become the energy superpower in the world, and we need to align that energy policy with our geo-politics such that we bring those allies close, we reassure them that they’ve got energy in the future, and that will change that dynamic. … Unfortunately, we need strong leadership at this time, and we really haven’t had it. And that’s why I think it’s important that we put more options on the table. … We have leverage like we’ve never had before.”

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.