Some Things You Should Probably Know About Natural Gas

January 20, 2009

Josh Nelson

Originally posted at The Seminal.

Natural gas does not get nearly as much attention as oil or coal. But the role this resource plays in our lives has been steadily increasing for decades. We must begin to address natural gas now, or we will leave future generations with a natural gas dependency reminiscent of our current dependence on foreign oil.

Here are some things you should probably know about natural gas.

Consumption of natural gas in the united states has remained relatively stable for the past 35 years.

But natural gas imports in the United States have more than quadrupled in the past 20 years.

And the price we pay for imported natural gas has more than tripled in the past 15 years.

This probably has something to do with the fact that production of Natural Gas in the United States peaked about 35 years ago, in 1973.

Recent enthusiasm for natural gas is due in large part to drastically increased shale gas production, particularly in the Barnett Shale. But the production process for shale gas, which includes fracturing the shale rock with water mixed with toxic metals and chemicals, is already polluting drinking water for hundreds of thousands of Americans.

Russia, Iran and Qatar have about 55% of the world’s known natural gas reserves. They are planning to create a cartel for natural gas, much like OPEC. Russia has already shown how far they are willing to go to manipulate prices. Natural gas proponents in the United States like to point to the fact that natural gas is, for the most part, not a fungible commodity. This is true because compressed natural gas is very difficult and expensive to transport, especially over long distances. But this is only true for compressed natural gas. The rapidly growing market for liquified natural gas, which can be transported relatively inexpensively, changes the equation quite a bit.

This is a dangerous path we are heading down. We have been increasing natural gas imports and expenditures at a healthy clip for the past several decades, while domestic production has struggled to remain flat. Industry points to new domestic production potential, but the potential costs include access to clean drinking water for millions of Americans in the surrounding areas. Meanwhile, a handful of countries control a majority of the world’s reserves, and are planning to organize a cartel to manipulate prices. Their ability to do so is likely to increase in the coming years, due to market realities (increasing fungibility).

While replacing coal-fired power plants and drastically reducing oil consumption remain the two key components of transitioning to a sustainable energy policy, those who are interested in long-term solutions must look beyond natural gas as well. Yes, natural gas will play some role as a “bridge fuel”. It is clear that we will continue to use it in power generation for years and years to come. And I’ll grudgingly admit, the percentage of vehicles running on natural gas will almost certainly go up before it goes down. But we should be very cautious and smart about how we produce our natural gas, how quickly we use our reserves, and how we can use them most effectively. Above all we must begin thinking about how we will prevent the global power dynamics behind the oil trade from being replicated with yet another finite fossil fuel. I’m sure even T. Boone Pickens would agree with that.

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