Why Natural Gas Makes Economic Sense
All of sudden, everybody seems to love natural gas. At the National Clean Energy Summit in Vegas recently, everybody fell all over themselves praising it - Al Gore, former Democratic Sen. Tim Wirth, former Obama transition team chief John Podesta. T. Boone Pickens and Ted Turner wrote an op-ed in the Wall Street Journal pointing out its advantages as a "bridge fuel" to a lower carbon future.
What gives? Well, in the last 18 months, two things have happened. First, there have been massive natural gas strikes in Louisiana, Texas, Arkansas, Michigan, Pennsylvania and elsewhere. The United States is now estimated to have more than 100 years supply at current rates of consumption. (And it may be much more than that.) Second, tapping that gas is now much easier, thanks to a new process known as hydro-fracking, which pumps high pressure water (and other chemicals) into the rock, freeing the gas. It also doesn't hurt that natural gas is far and away the cleanest burning fossil fuel, more than 50 percent cleaner than coal.
But natural gas has never been a leading player in the world energy story, only a supporting cast member. The reasons historically have been tied to limited availability. (Aside from the recent US discoveries, most of the world's proven natural gas reserves are in Russia and Iran. Hardly trustworthy sources.) Because the supply has historically been uncertain, prices have tended to fluctuate wildly, spiking in the late 1990s (with help from Enron) to a seven-year low just the other day (thanks to the recession). Coal is dirty, but its supply is domestic, reliable and its price is very, very cheap. No wonder utility companies have preferred it to natural gas.
But now that's changing. With plentiful domestic gas supplies now at hand, the advantages of natural gas become obvious. Pipelines already criss-cross the country to get the gas where it's needed. Natural gas generators can be added quickly and easily to existing power plants with minimal NIMBY issues, unlike coal. With all those pluses, the Waxman-Markey bill's proposal to spend tens of billions of dollars perfecting clean coal (and hardly anything on increasing the use of natural gas) is nonsensical.
So the recent popularity of natural gas makes sense, but when did sense have anything to do with the making of energy policy? It certainly doesn't explain the sudden interest on the part of so many players on the political left. Here's a guess: it's safe to say that the likes of John Podesta don't do anything without the sign-off of the White House. I think the Obama White House sees cap and tax going down - hard. Healthcare is inhaling so much political oxygen, cap and tax is likely to be smothered. (So to speak.) I sense they are developing a fall-back position for when their energy policy crashes and burns. If that is indeed the case, then maybe the Obamaites are more sensible than I give them credit for.