U.S. natural gas exports and their global impacts

• Published in: Applied energy 2014-05, Vol.120, p.95-103
• Main Authors: Arora, Vipin, Cai, Yiyong
• Format: Article
• Language: English
• Subjects: Applied sciences; Energy; Exact sciences and technology; Exports; General equilibrium; International; Natural gas; Shale
• ISSN: 0306-2619; 1872-9118
• DOI: 10.1016/j.apenergy.2014.01.054

•We evaluate potential global impacts of the U.S shale gas boom.•We use a global economic model, CTEM to understand this timely policy issue.•World economic activity is higher when U.S. natural gas exports rise.•The magnitude of U.S. income gains depends on the rate and level of export changes.•The effects on other countries vary with the scenarios and model parameter values. We evaluate potential global impacts of increase in U.S. natural gas exports as a result of the shale gas boom. To our knowledge this is the first such analysis using a global economic model to understand this timely policy issue. Our primary conclusion is that world economic activity is higher through most of the simulation period [2014–2035] when U.S. natural gas exports rise. The overall U.S. results mirror the global ones, but the magnitude of income gains depends upon how the rate of increase and level of exports are determined, and the price elasticity of natural gas supply. The U.S. benefits more when export increases and levels depend on natural gas production rather than when they are pre-determined by assumption. The economic impacts on other natural gas importers and exporters can change as well based on how export levels are determined. The effects on natural gas prices, consumption, and production in individual countries vary with the scenarios and model parameter values.