The impact of natural gas exports from the U.S. to Europe

Abstract

This thesis analyses the quantitative impact of potential liquid natural gas exports from the U.S. to the European market. I establish a simple, analytically transparent and tractable framework for supply and demand. In order to get quantitative estimates I combine this analytical framework with estimated demand and supply elasticities from existing literature. I find that exported quantity from the U.S. market will be approximately 20 % of produced quantity, and that domestic price will increase with approximately 11 %. In Europe the price will decrease by almost a fifth. I also find the future price and traded quantity to be mostly affected by elasticities in the European market, not the U.S. market. Finally, I find the prices in the futures market to adjust in the same pattern as this analysis, but I cannot identify that this is caused by expected LNG exports.