Monday, October 22, 2012

Better Question: Who is Soft on Coal?

I don't much like talking about politics these days because it tends to end civil discourse, but lately I've been hearing more and more about which presidential candidate would be better for energy.  In the debates so far, it's been a pretty weak-kneed conversation that has focused on gasoline prices rather than bigger picture issues.

But I'd like to narrow the question to natural gas.  There is one very big difference between the candidates when it comes to the future of natural gas, and that is their positions on burning coal.  The single biggest opportunity to grow demand for natural gas is as a fuel for power generation.  As we've seen over the past year, gas substitutes nicely for coal.  On the horizon are numerous coal plant closures hastened by increased regulation of air pollution by the current EPA.  This provides an avenue of growth for gas.

There has been much howling on the subject, but it is a big positive for the natural gas industry (not to mention the environment, too).  I'd expect the same approach from a second Obama term, with much of the same grousing.  While few will admit it, he's actually been good for natural gas.

But what happens if Romney is elected?  He's bought into the whole "war on coal" PR campaign.  I would suspect that his EPA will be considerably kinder to coal plants and likely would roll-back current regulations on coal power.  Coal has begun a slow descent as "America's Choice" for power generation, but without a push over the ledge, it will be a long slog before it gives up long-term market share, and natural gas will continue to be on the outside looking in.

Also, let's not forget that two of the biggest, although mostly indirect, backers of Romney are brothers Charles and David Koch of Koch Industries.  The men, who are tied for fourth place on the Forbes 400 with a combined $62 billion net worth, have been making a killing in their ethanol and manufacturing businesses that use cheap natural gas as a feedstock.  They have already helped beat back subsidies to support using natural gas as a transportation fuel.  With a strong voice in the White House, I fear there will be little support for LNG export, even though it is a pure manifestation of their beloved free market economy, thus killing yet another growth opportunity for gas.

I recognize that this is a very complex conversation that goes beyond the relationship of coal and gas, but I think the issue of squelching natural gas demand is being overlooked as part of the debate over energy.  I think both candidates will be very pro-energy industry, but what I don't want is for natural gas to slide back into its position as the red headed stepchild of the energy family.


Calvert Stone said...

Thanks for pointing out the link between Coal-Koch-Romney and Gas. No one seems to notice that Romney always says Coal first or second when he talks about Energy. Of course the Presidents support of gas is inadvertent. Fortunately the market will correct all of this even when politicians don't get out of the way.

Robert Hutchinson said...

Even though the Haynesville Shale was unveiled in March 2008, I guarantee you that neither Obama nor McCain said a word about natural gas in the 2008 campaign. It totally fell into Obama's lap, and to his credit he hasn't let people in his party kill the golden goose.

Shale gas, and specifically the Haynesville Shale, is the ultimate Black Swan and is why I still curate this web site long after most people have stopped caring about it.