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Impacts on Us

Pipelines lead to HIGHER, not lower, energy prices

The U.S. Department of Energy’s own study by the Independent Statistics and Analysis U.S. Energy Information Administration, released October 29, 2014, shows that increased export of Liquified Natural Gas (LNG) leads to higher energy prices for the American consumer.  (Not lower prices as the fossil fuel corporations want us to believe.)

Summary of results:

  • Increased LNG exports lead to increased natural gas prices.
  • Supply from higher domestic production is augmented by reductions in natural gas use by domestic end-users, who respond to higher domestic natural gas prices. As a result of higher natural gas prices, the electric generation mix shifts towards other generation sources, including coal and renewables, with some decrease in total generation as electricity prices rise.
  • Increased LNG exports result in higher total primary energy use and energy-related CO2 emissions in the United States.
  • Consumer expenditures for natural gas and electricity increase modestly with added LNG exports

This is the same conclusion reached in their 2012 study:

  • Increased natural gas exports lead to increased natural gas prices. Larger export levels lead to larger domestic price increases, while rapid increases in export levels lead to large initial price increases that moderate somewhat in a few years. Slower increases in export levels lead to more gradual price increases but eventually produce higher average prices during the decade between 2025 and 2035.
  • Natural gas markets in the United States balance in response to increased natural gas exports largely through increased natural gas production. Increased natural gas production satisfies about 60 to 70 percent of the increase in natural gas exports, with a minor additional contribution from increased imports from Canada. Across most cases, about three-quarters of this increased production is from shale sources.
  • The remaining portion is supplied by natural gas that would have been consumed domestically if not for the higher prices. The electric power sector accounts for the majority of the decrease in delivered natural gas. Due to higher prices, the electric power sector primarily shifts to coal-fired generation, and secondarily to renewable sources, though there is some decrease in total generation due to the higher price of natural gas.
  • Even while consuming less, on average, consumers will see an increase in their natural gas and electricity expenditures. On average, from 2015 to 2035, natural gas bills paid by end-use consumers in the residential, commercial, and industrial sectors combined increase 3 to 9 percent over a comparable baseline case with no exports, depending on the export scenario and case, while increases in electricity bills paid by end-use customers range from 1 to 3 percent.

The 2012 study specifies (2011) values of LNG in different global markets, so you can get an idea the powerful incentives gas corporations have for exporting.

“Unlike the oil market, current natural gas markets are not integrated globally. In today’s markets, natural gas prices span a range from $0.75 per million British thermal units (MMBtu) in Saudi Arabia to $4 per MMBtu in the United States and $16 per MMBtu in Asian markets that rely on LNG imports. Prices in European markets, which reflect a mix of spot prices and contract prices with some indexation to oil, fall between U.S and Asian prices. Spot market prices at the U.K. National Balancing Point averaged $9.21 per MMBtu during November 2011.”

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