An Energy Two Step

The price of natural gas is plummeting as new sources come on line. Meanwhile the price of gasoline is going through the roof. It is a tale of two policies and different choices. Natural gas is cheap and getting cheaper because of smart (or maybe lucky) decisions made in 2006-7. Gasoline is expensive because of dumber ones made a bit later, but that is a different story. Let’s drill a little deeper into the success of natural gas.

Most of the new natural gas coming on line now is being produced from gas rigs put into production between March of 2007 and May of 2008. This was a time of high gas prices that encouraged the use of a promising technology. Most of the rigs were built on private and state land. The Federal government did not then and does not still participate in proportion to the land it controls. Back then, gas cost $255 per 1000 cubic meters. It eventually went as high as $456.57, but then the new sources started to work. It has now fallen to about $100, the lowest it has been in real terms ever.

We know how to make energy cheaper. It is actually very simple, but it is not easy politically to make it happen. We also need to address other issues, such as the environment.

I grew up with the argument that we would soon run out of oil and gas. In the 1970s, it seemed like the day of reckoning was not far off. New technologies have made this argument irrelevant, or at least has postponed the hypothetical day of reckoning for at least a hundred years or more. This is not a problem.

I think we can safely assume that our successors in 2121 will have access to technologies as wondrously beyond ours today as ours are beyond those of our grand grandfathers in 1912. Energy always remains a challenge, but there is no crisis except in the minds of those with little imagination or confidence in human ingenuity.

The environmental argument is more complicated. Fossil fuels release CO2, which contributes to global warming. Could it be that we are trading greater economic prosperity today for ecological problems tomorrow? I think we might have a tradeoff here. But I see a sensible middle ground. Natural gas generally replaces coal. Natural gas releases only about 1/3 as much CO2 and almost no standard pollution in comparison to coal. While using NO fossil fuels would be better, this is not a realistic option in the near term. In the real world, energetic exploitation of natural gas will be a net benefit to the environment in relation to the other real world scenarios.

IMO, we can accept the good alternative or continue to pursue the chimera of a perfect alternative which will in fact lead us into a very bad scenario.

So we have the following. Natural gas is cheap; it is Americans; it is available over wide regions; it can vastly increase the wealth of the U.S.; it is more environmentally benign than the real world alternatives and we have technologies that can produce it cheaply to satisfy our needs for the next century. Seems a good idea to me. It turns out that you can drill your way to a better energy future.

We are rapidly shifting to alternative energy sources, but we need a bridge to the non-fossil fuel future. Natural gas is that bridge. In 2121 the world will be as different from ours as ours is from 1912, the year the Titanic sunk. We will have it figured out better by then.


Posted by Christine & John at March 7, 2012 7:19 PM
Comment #337798

C&J, a solid, sensible, non-biased article that I agree with. I noted a WaPo article recently where a truck mfctr is going to produce large trucks for companies to use for fleet vehicles.

And, I have no doubt that natural gas, if put into play in a big way would soon match the price of gasoline, albeit both would be cheaper or as priced similar as today.

The last thing we need are monopolies in any sector of the economy.

Otherwise - - -

Posted by: Roy Ellis at March 7, 2012 8:54 PM
Comment #337844

Roy, I agree, it is a bit more confusing when it’s not put in story board form. It’s oil corporation advertising. They want to sell both the gasoline and the alternative fuel NG at the pumps. Another kill the alternatives for a few more decades ploy. There will be savings at first but they own both products and will eventually compensate for that.

Posted by: jlw at March 8, 2012 1:51 AM
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