Impact on U.S. domestic natural gas
prices—among the lowest in the world—would remain
negligible
WASHINGTON, Dec. 17,
2024 /PRNewswire/ -- On their current trajectory,
growing exports of U.S. liquefied natural gas (LNG) would support
nearly half a million domestic jobs annually and contribute
$1.3 trillion to U.S. gross domestic
product through 2040 while having a negligible impact on domestic
gas prices, according to a new comprehensive study by S&P
Global.
The study projects U.S. LNG export capacity to double over the
next five years under a Base Case that takes into account current
conditions, including impacts from the 2024 pause of pending
decisions on exports of LNG to non-free trade agreement countries.
In addition to the projected sizeable jobs and GDP gains, future
export activity is anticipated to generate more than $2.5 trillion in total revenues for U.S.
businesses, $166 billion in federal
and state tax revenues and more than $500
billion in labor income.
"The emergence of the U.S. LNG industry has placed the United States in the pole position with
global demand for gas expected to grow through 2040 alongside the
rapid growth of renewables," said Daniel
Yergin, Vice Chairman, S&P Global. "Continued growth in
U.S. LNG capacity would have outsized impact in terms of jobs, GDP
and labor income. In addition to domestic economic benefits, being
the world's leading LNG supplier adds a new dimension to U.S.
influence abroad. It was U.S. LNG that replaced nearly half of
Russia gas supply to Europe after the outbreak of war in
Ukraine."
The study, Major New U.S. Industry at a Crossroads: A
U.S. LNG Impact Study leverages the combined expertise of the
S&P Global Commodity Insights and S&P Global Market
Intelligence divisions to provide a comprehensive and
forward-looking assessment of the projected impacts of LNG exports
on the U.S. economy. It compares Base Case findings—utilizing
S&P Global's proprietary "Inflections" scenario—to those under
an Extended Halt Scenario where no new or currently paused U.S. LNG
capacity comes online.
The study is the first in a two-part series. A future companion
study will conduct a global greenhouse gas emissions impact
analysis (including methane) to quantify expected emissions under
the two study scenarios and will expand the economic analysis to
include regional and supply chain impacts.
LNG has emerged as a major U.S. industry in less than a decade
and made the United States the
world's leading supplier. Exports of LNG already support more than
270,000 U.S. jobs annually and have generated more than
$400 Billion in GDP and more than
$800 billion in total revenues for
domestic businesses since exports began in 2016. Export revenues
from U.S. LNG already exceed those of U.S. soybeans, are twice
that of the nation's movie and television exports and half those of
U.S semiconductors.
At the same time, most of the U.S. gas supply—nearly 90%—remains
available for domestic consumption and natural gas prices for U.S.
households continue to be among the lowest in the world.
"U.S. gas production has more than tripled compared to the
amount of LNG that the country exports," said Eric Eyberg, Vice President, Gas and Power
Consulting, S&P Global Commodity Insights. "That abundant
supply has allowed LNG exports to support more than 270,000 jobs
annually and contribute more than $400
Billion to GDP to date with no major impact to domestic
prices."
However, if new or currently halted LNG capacity does not come
online, the repercussions would be substantial, the study
finds.
Under the study's Extended Halt Scenario:
- An annual average of 100,000+ jobs would be at risk
- $250+ billion contributions to GDP would go unrealized
- $491 billion in lost revenues for
U.S. businesses
- $110 billion in lost labor
income
- $34 billion forgone federal and
state tax revenues
Restricting future LNG capacity would have little to no benefit
in terms of U.S. natural gas prices either, the study finds. The
difference between the two study scenarios in terms of average
annual gas costs for U.S. households (2025-2040) would be less than
1%.
If future U.S. capacity were not to materialize, other countries
would seek to fill the gap, the study says. Qatar, Canada
and Mozambique would be expected
to accelerate their own projects to claim market share. Other
countries, including Russia, would
likely add capacity as well.
In total, the study estimates that 85% of the supply deficit
under the Extended Halt Scenario would be made up by fossil fuels
from non-U.S. sources.
"The economic consequences to ceding the U.S. position in LNG
would be stark, but it goes far beyond that," said Carlos Pascual, Senior Vice President for Global
Energy and International Affairs, S&P Global Commodity
Insights. "Such a move would diminish U.S. geopolitical influence
as a reliable and affordable energy supplier to allies and trading
partners, as a key source for expanding energy access in developing
countries and—by providing a replacement for coal in baseload power
generation—an important catalyst to global decarbonization
efforts."
About the Study:
Major New U.S. Industry at a Crossroads: A U.S. LNG
Impact Study is available at:
https://www.spglobal.com/en/research-insights/special-reports/major-new-us-industry-at-a-crossroads-us-lng-impact-study-phase-1
This study offers an independent and objective assessment of the
economic, market and global impact of the U.S. LNG Industry built
from a detailed bottom-up approach, at the asset and market level,
technology by technology. It represents the collaboration of
S&P Global Commodity Insights and the Global Intelligence and
Analytics unit within S&P Global Market Intelligence supported
by the world's largest expert team of more than 1,400 energy
research analysts and consultants continuously monitoring,
modelling and evaluating markets and assets. The analysis and
metrics developed during the course of this research represent the
independent analysis and views of S&P Global. The study makes
no policy recommendations. This research was supported by the US
Chamber of Commerce.
S&P Global is exclusively responsible for all of the
analysis, content and conclusions of the study.
Media Contacts:
Jeff Marn +1-202-463-8213,
Jeff.marn@spglobal.com
About S&P Global
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