Two economists have integrated their disparate economic models and concluded that the macroeconomic impact of U.S. liquefied natural gas (LNG) exports may be “minimal,” and that fears of domestic price spikes are overstated.

Los Angeles-based Robert Brooks and Washington, DC-based Scott Nystrom experimented with “tying together” their two models — a natural gas market model and a detailed model of the U.S. economy.

“We succeeded in showing that we could integrate the models and produce a solution that was consistent between them,” Brooks, a Ph.D. economist with his own consulting firm, told NGI. They looked at three different scenarios — zero, 3 Bcf/d and 6 Bcf/d levels of exports. The 3 Bcf/d level had the least impact.

For each scenario, measurements were made of the impacts on:

They concluded that “LNG exports will have mixed impact on the economy, depending on the perspectives of time and region [in the period of 2018-25].”

Although he agrees the model merging and report are somewhat theoretical and academic, Brooks said “that our work was not just an academic exercise.

“The principal finding was that the economic cost of somewhat higher prices due to LNG-export-generated increased [natural gas] demand is going to be minimal. In fact, there are both positive and negative economic effects that tend to net out on the positive side.”

He said that the bottom line is that “fear-mongering about negative economic effects on LNG exports is totally unjustified.”

Brooks said he and Nystrom, who is an economist with Regional Economic Models Inc. (REMI), have completed follow-up work that updated the data used and they got “pretty much the same results.”

The results were presented at a recent REMI webinar outlining the macroeconomic of LNG exports.

“The macroeconomic impact of exports is positive, but not extremely large,” they concluded. They note that the historical context is that by 2025, historical growth rates “suggest” the U.S. economy will be around $22 trillion, compared to $15 trillion now.

Out of that level of macro growth the two economists said the impacts from LNG exports will have a potential to influence potential growth of between 1% and 2%. In a $15 trillion economy, 2% would represent a $30 billion contribution.

Brooks and Nystrom noted that there have been a “divergence of results” in previous major LNG export reports (Brookings Institution, Deloitte, U.S. Energy Information Administration, ICF International, and Navigant), and “answering the divergence of these results is not the purpose of [our] report.”

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