Mirage on the Ocean?
Dr. Laura Olive is senior consultant at National Economic Research Associates, NERA, in Boston. She received her Ph.D. in economics from Northeastern University.
The United States is poised to become one of the largest exporters of liquefied natural gas, LNG, in the world.
Industry press reports claim players expect that U.S. gas is about to change the global LNG market forever, fueling European gas-fired power plants in the near future.
Indeed, as of June 2016, FERC had approved converting eight abandoned LNG import terminals into export terminals. Five were under construction at the time. Fourteen more proposals are under review or are in the pre-filing stage.
Several facilities are already proposing expansions to their original projects. The entry of the U.S. as a major exporter in the market will definitely have an effect on LNG world trade.
However, the vision for U.S. LNG exports to spark a true commodity market, like oil, does not take into account the unique features in regulatory and cost structures that fog that vision.