Friday, June 1, 2012

Natural Gas Exports on Back Burner?

The Wall Street Journal headline caught my eye, "U.S. Gas Exports Put on Back Burner."  WTF, I thought.  Exporting natural gas seems like a no brainer to me.  It creates a new export industry and sustains jobs and investment in the U.S.  But reading the article got me thinking of the unintended complications created by several years of cheap natural gas.

Consumers are suddenly addicted to lower utility costs.  Everyone is hearing stories of the rebirth of the manufacturing and chemical industries, and it's due in large part to our reliable supply of low cost natural gas.  Advocates of natural gas as a transportation fuel use the low price of gas versus oil-based products as a key selling feature.

Cheap gas is nice, but the current price makes drilling for gas (as opposed to producing gas associated with oil drilling) uneconomic.  It is an unsustainable situation in the long-term.

So many times in the past five years natural gas has become a victim of its own success.  It looks to be happening again.

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