U.S. Liquefied Natural Gas Exports and America's Foreign Policy Interests

The export of liquefied natural gas (LNG) from the United States to other countries has significant foreign policy ramifications. Given the uncertain impact of such exports, it is not surprising that the U.S. administration has equivocated on various permitting decisions. However, in December 2012 or shortly thereafter, the Department of Energy is expected to release a study analyzing and evaluating many of the trade-offs involved in such exports. Unless this report conclusively demonstrates that (1) LNG exports would cause significant damage to U.S. residential and industrial consumers and (2) that higher domestic natural gas prices would not be more than compensated for through the gains of international trade, the administration should permit the construction of at least three or four more LNG export terminals. Such a permitting approach would not greatly change the existing domestic natural gas market, and it would allow the government to observe how the markets and their participants react to the change. Besides the probable benefits accruing to the United States through increased trade, such a change would bring a number of other foreign policy benefits.