Skip to main content

Natural Gas: Pricier Than You Might Think

By Eric McErlain
Here's Policy Pete on how the rising price of natural gas is affecting U.S. energy markets:
The US energy jones is about to start getting really nasty. The petroleum industry and the government, having totally misunderstood as recently as 2000 what was going to happen to the natural gas supply beginning now, are really panicked. Several dozen crash LNG projects are all on the fast track, being considered by good old FERC on a myopic case by case basis, and pretty soon a growing part of the natural gas 56 million American families use to cook their food and heat their residences will be brought in (at what threatens to be ungodly expense) from the same unstable regions that provide export oil. But unlike oil, where bidding up the price can resolve any short-term supply problems, natural gas dependency is fraught with danger.
For more on the dangers presented by overdependence on natural gas, click here for a speech our CEO, Skip Bowman, gave last April in San Antonio:
Since 1992, when the U.S. last enacted major energy policy legislation, the industry has built approximately 270,000 megawatts of new gas-fired generating capacity.

By contrast, only 14,000 megawatts of new nuclear and coal-fired capacity have entered service. That includes 4,355 megawatts of new nuclear capacity and 9,560 megawatts of new coal, all of it planned and under construction long before 1992.

Coal and nuclear energy together represent approximately 70 percent of U.S. electricity supply. They provide the highest degree of price stability, but investment in new nuclear and coal-fired power plants has virtually disappeared in the last 10 to 15 years.

Instead, we are placing unsustainable demands on natural gas supply, exposing consumers of natural gas and electricity from natural gas to punishing price volatility, and forcing large industrial users of natural gas to move jobs and production offshore because they cannot afford $6 gas as a feedstock.
This is a problem that won't be going away anytime soon.

Technorati tags: , , , , ,

Comments

Engineer-Poet said…
Over at The Ergosphere, a poster cited an EIA report which projects huge increases in NG-fired electrical generation.

I think the cost of imported LNG is going to put the kibosh on that pronto.  It's also going to spur installation of wind farms, because nothing else can offset the need for electrical generation faster than a wind turbine.

Nuclear is long-term and fraught with political difficulties, but I'm sure we're going to have more of it.... eventually.  It may take considerable pain before people wake to the reality.
August 1, 2005 at 3:27 PM
Post a Comment

Popular posts from this blog

Activists' Claims Distort Facts about Advanced Reactor Design

By
Below is from our rapid response team . Yesterday, regional anti-nuclear organizations asked federal nuclear energy regulators to launch an investigation into what it claims are “newly identified flaws” in Westinghouse’s advanced reactor design, the AP1000. During a teleconference releasing a report on the subject, participants urged the Nuclear Regulatory Commission to suspend license reviews of proposed AP1000 reactors. In its news release, even the groups making these allegations provide conflicting information on its findings. In one instance, the groups cite “dozens of corrosion holes” at reactor vessels and in another says that eight holes have been documented. In all cases, there is another containment mechanism that would provide a barrier to radiation release. Below, we examine why these claims are unwarranted and why the AP1000 design certification process should continue as designated by the NRC. Myth: In the AP1000 reactor design, the gap between the shield bu...
23 comments
Read more

Nuclear Utility Moves Up in Credit Ratings, Bank is "Comfortable with Nuclear Strategy"

By
Some positive signs that nuclear utilities can continue to receive positive ratings even while they finance new nuclear plants for the first time in decades: Wells Fargo upgrades SCANA to Outperform from Market Perform Wells analyst says, "YTD, SCG shares have underperformed the Regulated Electrics (total return +2% vs. +9%). Shares trade at 11.3X our 10E EPS, a modest discount to the peer group median of 11.8X. We view the valuation as attractive given a comparatively constructive regulatory environment and potential for above-average long-term EPS growth prospects ... Comfortable with Nuclear Strategy. SCG plans to participate in the development of two regulated nuclear units at a cost of $6.3B, raising legitimate concerns regarding financing and construction. We have carefully considered the risks and are comfortable with SCG’s strategy based on a highly constructive political & regulatory environment, manageable financing needs stretched out over 10 years, strong partners...
Post a Comment
Read more

Wednesday Update

By
From NEI’s Japan micro-site: NRC, Industry Concur on Many Post-Fukushima Actions Industry/Regulatory/Political Issues • There is a “great deal of alignment” between the U.S. Nuclear Regulatory Commission and the industry on initial steps to take at America’s nuclear energy facilities in response to the nuclear accident in Japan, Charles Pardee, the chief operating officer of Exelon Generation Co., said at an agency briefing today. The briefing gave stakeholders an opportunity to discuss staff recommendations for near-term actions the agency may take at U.S. facilities. PowerPoint slides from the meeting are on the NRC website. • The International Atomic Energy Agency board has approved a plan that calls for inspectors to evaluate reactor safety at nuclear energy facilities every three years. Governments may opt out of having their country’s facilities inspected. Also approved were plans to maintain a rapid response team of experts ready to assist facility operators recoverin...
Post a Comment
Read more