The Gas Cliff
The fiscal cliff is getting a lot of attention lately.
Fewer are paying attention to the gas cliff.
Simply put, we are becoming increasingly reliant on natural gas to generate power in this country. That is a good thing, the result of ample shale resources that are now being exploited. It is moderating consumer electricity bills and home heating bills. It is also shrinking our nation’s carbon footprint.
Just a few months ago, the United States for the first time generated more power by burning gas than burning coal.
Tom Fanning, the head of Southern Company, has on several occasions pointed out that his company along with others is using gas to generate a growing share of its power. But Southern, he said, is also building the first new nuclear power plants in decades – and it is also pursuing cleaner coal-burning technology.
He and others have said that the surest path to rapidly escalating gas prices is for everyone to act as if gas prices will never rise.
You can now add to the combustible mix of gas uncertainties the prospect of rising exports of natural gas from America.
A study for the Department of Energy, just released, said the economic gains from such exports outweigh the danger of boosting gas prices for consumers and gas-dependent industries.
The New York Times today reported that 15 proposed liquefied natural gas export terminals would have a combined capacity of 26.5 billion cubic feet a day – one-third of the volume of gas consumed in the country today.
Some say it is unlikely that all of the proposed new LNG export facilities will be built.
But who is willing to argue that is a certainty when there is a huge price disparity between the cost of gas in America and in an energy-starved developing world?
Who will bet their business on an assumption that exporting as much as one-third of the gas we need today will not have a huge disruptive effect?
EnergyBiz magazine in its upcoming January issue will talk with chief executive officers of six natural gas utilities about these and related issues.
The EnergyBiz Leadership Forum, “Strategies for a Radically New Utility Universe,” March 18-19 in Washington, will explore the broad strategic and business implications of the shale gas revolution – with Tom Fanning and many others.