On the surface, there’s an alluring logic in exporting natural gas. The United States has been flooded with cheap gas thanks to its newly exploitable (and potentially large) shale resources. And gas prices are higher in many other countries. So why not ramp up exports, turn a profit, and reap the gains from trade? That explains why various producers are asking the Energy Department to green-light new export facilities, such as Cheniere Energy’s just-okayed Sabine Pass Liquefaction terminal in Cameron Parish, La., which will ship out two billion cubic feet of gas per day by 2015. Seven more projects are awaiting approval.
In his letter, however, Markey notes that such plans could lead to unintended consequences. For starters, natural gas isn’t as fungible as oil — partly because it’s harder to store and ship — which means the price isn’t the same everywhere in the world. If the United States ships natural gas abroad, then U.S. consumers could face higher energy prices at home. One consultant report, for instance, estimates that the Sabine project could hike U.S. natural gas prices by 11.6 percent by 2015.
And that’s not all. As the Council of Foreign Relations’ Michael Levi has argued, boosting natural-gas exports could have both ups and downs. On the beneficial side, the United States could strategically use its gas to help Europe wean itself off its dependence on Russian exports. What’s more, other countries might find better opportunities to displace oil with natural gas than the United States can, which, in turn, could put much-needed downward pressure on world oil prices.
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