The US’s supply of natural gas has been much in the news lately as prices have fallen to $4 /mbtu and a steady stream of announcements and articles have touted the potential of shale gas.

In the short term, falling industrial production has reduced the demand for natural gas and electricity generated by natural gas. In addition to the fall in industrial demand, mild weather — expected to last for another two weeks in the northeast — has reduced the residential and commercial cooling demand. Last week’s injection of 114 billion cubic feet into storage increased the US stockpile to 2.55 trillion cubic feet which is 23 percent above average and 32 percent above last year’s level. Prices are down 70 percent from last July. While the number of rigs drilling for gas is down by more than 50 percent since last September, so far there has not been a significant drop in production.

A report issued by the non-profit Potential Gas Committee last week concludes that due to the discovery of immense new shale gas fields in Texas, Louisiana and the Appalachians, the US now has 2,074 trillion cubic feet of gas in the ground or nearly 100 years worth “at current rates of production”-a metric which we find to be not very useful. Industry estimates put the reserves even higher at 2,247 trillion cubic feet.

The gas industry is touting the discoveries as a domestically produced resource, more environmentally friendly than coal, which could easily handle increased consumption without danger of running short for many decades.

The report has many implications; T. Boone Pickens is saying that there is no need to build a $26 billion pipeline to access 39 trillion cubic feet of Alaska gas when so much is already available close to existing pipelines and centers of consumption. While the American Clean Energy and Security Act, which mandates large and expensive cuts in emissions is currently bogged down in a fight with agricultural interests, passage of the bill could spark a major shift to natural gas as a relatively inexpensive means of compliance.

For now natural gas prices are too low to be profitable. EnCana, Canada’s largest producer is cutting back production. The use of natural gas as a substitute for liquid fuels in motor vehicles has never really caught on in the US as it has in many parts of the world. Should gasoline prices rise to levels not yet seen, cheaper, more available, and much cleaner natural gas could become more prevalent as a way to power motor vehicles in the US. ┬áBut this step is far from a given.

2 thoughts on “Natural Gas”

  1. Compressed natural gas cars can be manufactured a lot cheaper than electric ones. What generates less polution, generating electricity to charge the batteries of electric cars, or burning natural gas to drive the vehicle ? I would guess that the gas car would produce less overall pollution, since you have a lot of losses before the battery of an electric car is actually charged. If you build enough gas fired power plants to charge 50,000,000 cars, peak gas might come a lot sooner than you think. But I am sure Washington has a grand plan to solve this coming problem like they did the housing bubble. And then there is China. Got a bicycle & gas mask ?

  2. The dream of a return to economic growth for the United States poersists with the idea that we can and will reestabish the same level of consumerism and prosperity of the 2003-5 period. Nutso!! it can’t happen as we have no unsubsidized exports that I can find.

    I was shocked to find even our entertainment industry gets subsidies for domestically produced movies. Boeing is loosing orders for it’s over subsidized ” Dream Liner ” Military good sold overseas are super subsidized in development and manufacture and food and fiber would die without tax breaks and the Dept. of Agriculture.

    Can we have an employed middle class at anything near the wages they have received in the past? Which mean less spending. Getting back to where we were is a fictive dream – forget it – unless we get find some miracle exports.

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