Environmental Engineering Reference
In-Depth Information
gas for several decades; the costs of expansion in gas resources are un-
certain; and even without additional greenhouse gas (GHG) abatement
policies, gas production and use in 2050 will be higher than today. Jacoby
et al.
3
also examined the influences of the expansion in US shale gas on US
energy and environmental policy and reached similar conclusions.
Recent research in this area also examined the consequences of alternative
gas export policies for the US economy. NERA Economic Consulting,
4
based
on a set of simulation results obtained from an energy-economy model,
suggested that an expansion in exports of natural gas will: (1) increase its
domestic prices; (2) generate minor gains for the US economy; (3) improve
welfare of owners of natural gas resources; and (4) negatively affect energy-
intensive industries and electricity producers. Deloitte,
5
using an integrated
industry model (named North American Power, Coal and World Gas),
reached the expected conclusion that an increase in US gas exports will in-
crease its domestic gas price and lower world price. Brooks,
6
who used the
GPCM
s
Natural Gas Market Forecasting System modeling framework, also
made the same argument. Finally, Ditzel et al.
7
carried out a study related to
US natural gas export policies and assessed the impacts of those policies on
the US manufacturing sector and natural gas prices. These authors con-
cluded that higher gas prices due to the expansion in exports of natural gas
will negatively affect manufacturing industries and electricity producers,
limit the use of vehicles which operate using natural gas and, in aggregate,
negatively affect the entire US economy.
In addition to these studies, others have tried to measure the economic
benefits of the expansion in US shale gas. For example, IHS Global Insight
Inc.
8
evaluated the economic impacts of the expansion in supply of gas for
the US economy using a US macro model in combination with the IMpact
analyses for PLANning (IMPLAN) model and made several projections. One
is that shale gas will contribute about $118 billion and $231 billion to the US
GDP in 2015 and 2035, respectively. They also projected that the gas industry
will provide about 0.9 million and 1.6 million job opportunities in these
years. Citi GPS,
9
also using a US macro model, concluded that the expansion
in gas supply will improve the US GDP by 2-3% by 2020. Finally, Arora,
10
using a US macro computable general equilibrium model, concluded that
the expansion in supply of natural gas will improve the US GDP at only a
small-to-moderate rate.
These studies focused on shale gas, but did not explicitly cover shale oil as
well. This chapter fills the gap in this area and examines the economic and
greenhouse gas (GHG) emission consequences of the expansion in US sup-
plies of oil and gas. It also examines the impacts of alternative trade policies
for exports of natural gas.
3 The GTAP Model
The modeling framework used consists of a revised version of the Global
Trade Analysis Project-Energy (GTAP-E) model and an enhanced version of
