Posted on 10/08/2013 9:42:20 PM PDT by ckilmer
October 8, 2013
News Release
West Lafayette, Ind. -- The increasing production of shale oil and gas should benefit the U.S. economy by raising the nation's gross domestic product by an average of 3.5 percent annually through 2035, according to a report by Purdue University energy economists.
"The economic impact of shale oil and gas is clear: It is a game changer for the U.S. economy," said Wally Tyner, the James and Lois Ackerman Professor of Agricultural Economics and one of the researchers. Shale oil and gas are found deep underground, below conventional oil and far below the water table. The oil and gas are produced by injecting chemicals, water and sand into the shale rock at high pressure, thereby fracturing the shale rock to release the oil and gas, which is then brought to the surface.
The report summarizes two papers - one examining the shale oil and gas boom and the other analyzing potential ramifications of significant exports of natural gas - by three researchers in the Department of Agricultural Economics, including assistant professor Farzad Taheripour, who was the lead author, and postdoctoral associate Kemal Sarica. The papers were presented in July at the annual North American joint conference of the United States and International Associations for Energy Economics in Anchorage, Alaska. Paper summaries now have been made public.
"Our results indicate that the shale oil and gas boom should have a major impact on the U.S. economy," the researchers say, with the nation's gross domestic product from 2008 to 2035 averaging 2.2 percent higher than its 2007 level. Without the expansion in production from shale, the GDP - the value of all of the nation's goods and services - would average 1.3 percent lower.
"That means that U.S. GDP over the entire period of 2008-2035 on average would be 3.5 percent higher each year than it would have been without the shale boom." That amounts to an average of $473 billion per year added to the economy during the period.
Restricting gas exports increases the magnitude of the annual gains to $487 billion, according to the report.
The shale boom has other benefits to the economy, including substantially increasing employment and reducing oil and natural-gas prices, the report states. On average each year from 2008 to 2035, oil prices would be 7 percent lower and gas prices 12 percent lower than they would have been without the increased production.
Further, if gas exports are restricted, prices of natural gas would drop by 24.1 percent and the economy would gain $13.3 billion, according to the report. That pales in comparison to a U.S. economy of $15 trillion, the report notes, but the analysis shows that restricting the exports "provides a small but positive benefit."
The report points out that exporting natural gas is economically attractive to the industry because U.S. prices currently are as little as one-fifth the prices in foreign markets. There would be considerable profit to be made even considering the cost of liquefying the gas and shipping it.
"On the other side, there is potentially large domestic demand for natural gas in electricity generation, industrial applications, the transportation sector and for other uses," the researchers say. "Thus, the question is which pathway provides the best economic and environmental outcome for the U.S."
Permitting major exports of natural gas would result in losses in labor and capital income in all energy-intensive sectors and increases in electricity prices, according to the report.
"The bottom line is that caution is in order in approving large levels of exports," the researchers say.
They are definitely a threat.
Will ‘The Great ObamaNation’ take the credit?
Take credit and try to cripple the country it at the same time.
Permitting major exports of natural gas would result in losses in labor and capital income in all energy-intensive sectors and increases in electricity prices, according to the report.
Sounds like a zero sum analysis. Exports will smooth out the boom and bust cycle. I am seeing claims, but no evidence for lower GDP based on open export markets.
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I’ve gone back and forth on this one. Right now there’s so much natural gas being flared off in the baaken and eagle ford that you can see it from space. both places look like large megalopolis’s. Its a waste. The price of natural gas could easily go up to 6 and the USA would still be a magnet for foreign manufacturers looking for cheaper natural gas.
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