A surge in low-cost U.S. natural gas production has prompted a flurry of proposals to export liquefied natural gas (LNG). A string of permit applications are now pending at the Department of Energy (DOE), and more can be expected; lawmakers are also debating the wisdom of allowing LNG exports. This paper proposes a framework for assessing the merits of allowing LNG exports along six dimensions: macroeconomic (including output, jobs, and balance of trade), distributional, oil security, climate change, foreign and trade policy, and local environment. Evaluating the possibility of exports along all six dimensions, it finds that the likely benefits of allowing exports outweigh the costs of explicitly constraining them, provided that appropriate environmental protections are in place. It thus proposes that the DOE and the Federal Energy Regulatory Commission (FERC) approve applications to export natural gas. It also proposes steps that the United States should take to leverage potential exports in order to promote its broader trade and foreign policy agendas.
Ironically, the precise strength of the U.S. energy sector—that it is driven by the market and not by a government—also means that it is not a stick to beat people with.