As expected, the natural gas revolution in the U.S. is having a large positive economic impact. According to the Financial Times, “manufacturers have announced more than $90bn worth of investments in the US to take advantage of its cheap natural gas.” This is leading to an industrial renaissance as numerous companies in various sectors such as petrochemicals, fuel, fertilizer, and steel have committed or are considering multi-billion dollar investments in the U.S.
Underscoring the competitiveness of U.S. fuel feedstocks is the fact that the price of natural gas, which hit a 10-year low earlier this year, is currently still between $3-4 per million British thermal unit (mBTU). This contrasts sharply with Asia, where liquefied natural gas goes for about $16 per mBTU, making U.S. export opportunities attractive. How much should be exported as LNG, and how much should be kept on shore for domestic use is currently being debating as companies apply for export permits from the federal government.
A recent report by the Department of Energy released concluded that even unrestricted LNG exports would only have a “fairly modest effect on US gas prices, and would be a net benefit to the economy.” While there are environmental concerns, it seems at least at this point that they hold a level of risk that is worth pursuing. The reduction in emissions (as opposed to using another energy source) and the economic jolt from the natural gas revolution is producing seem to be worth it in the short term. A key question is what this does to the likelihood of renewables gaining a foothold in the market. In the ever tenuous balance between short term economic gain and long term environmental protection - and hence long term economic gain, since economics is dependent on the environment – which way are we tilting the scales?
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