Washington is neglecting a natural choice in gas

January 14, 2011

By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

NEW YORK — Natural gas may be Uncle Sam’s most ignored blessing. With resources now equivalent to Iran’s oil reserves, domestic shale gas offers a chance to meaningfully reduce the country’s dependence on foreign oil, cut the deficit and even reduce greenhouse emissions.

Every modern president since Richard Nixon has paid lip service to the quest for energy independence. Similarly, the bloated trade deficit and climate change have become political obsessions over the past decade. Yet precious little has been done to deploy America’s growing gas endowment to solve these problems.

To be fair, U.S. politicians have had little time to react. Just a few years ago it looked like falling domestic gas production would force the United States to rely increasingly on imports. Instead new drilling technologies — hydraulic fracturing and horizontal drilling — have enabled energy firms to tap massive quantities of gas trapped in rock.

Just last month, the Department of Energy more than doubled estimates of recoverable shale reserves to 827 trillion cubic feet — the energy equivalent of roughly 140 billion barrels of oil. That’s slightly greater than the proven oil reserves of Iran, the world’s third largest repository of crude.

As gas reserves have ballooned, so has the potential to help solve decades-old policy conundrums, starting with America’s addiction to foreign oil. Last year the tab for the 12 million barrels of oil the nation imports daily came to around $270 billion — accounting for roughly half the total trade deficit.

Gas can be used directly in vehicles and to generate electricity. So it offers the best hope of kicking the habit. By shifting America’s gasoline-guzzling heavy vehicle fleet and buses to natural gas the United States could cancel orders for up to 3 million barrels of oil a day. This could shave $100 billion off the annual trade deficit at current oil prices.
It would also represent a giant step toward energy independence, reducing U.S. reliance on unstable foreign powers. Three million barrels a day is equivalent to more than half of imports from OPEC — Saudi Arabia, Venezuela and Libya combined sell around 2 million barrels daily to America. Even greater import savings could accrue if such a move gives way to the next generation of U.S.-made electric cars.

Finally, gas offers one of the quickest and most cost effective ways of cutting greenhouse emissions. Switching electricity generation from coal to natural gas roughly halves the output of carbon dioxide. Simply raising the use of America’s advanced gas plants to 60 percent capacity, from 40 percent at present, would eliminate a quarter of the increase in emissions seen over the past two decades, according to Navigant, a consultancy.

So why has the U.S. Congress so far looked this gift horse in the mouth? The speed of the shale revolution may ironically be partly to blame. Initially many policymakers were skeptical that gas reserves could have increased so suddenly. But the political heft of the coal lobby — and its close ally, the railroad sector — also helps explain inertia in Washington. By comparison, gas producers are political parvenus. Spiraling budget deficits meanwhile have made it harder to find even modest public funds to promote a switch to gas vehicles.

Still, given the benefits of gas, further delay would be a shame. The free market has already done much of the heavy lifting. With the abundance of gas pushing down prices, only minimal policy support is needed. First, new lawmakers should back Senate leader Harry Reid’s long-standing plans to promote natural gas-powered heavy duty vehicles. For taxpayers, subsidizing these vehicles initially would soon pay off as rising sales drove down prices. And with gas less than a third the price of oil for the same energy content, freight firms would quickly recoup the cost of pricier trucks through lower fuel bills.

Second, lawmakers should cease coddling the coal industry. Putting a price on carbon may be politically difficult, but Congress should allow the president to use the Environmental Protection Agency to penalize coal for its emissions. With so much spare capacity, gas-fired plants could immediately pick up the slack. Rock bottom gas prices and abundant supplies would make the impact on electricity prices virtually imperceptible.

America’s natural gas bonanza is too good an opportunity to miss. The new Congress needs to embrace the bounty beneath its feet.

Comments

It takes a long time for elected officials to get all of there ducks in a row . They have already accepted money from other energy sources . That comes first , not the country.

Posted by losconinhum | Report as abusive
 

There is amble evidence that many decisions made without recognizing the technical problems of using wind and solar due to there intermittent production and distribution of electricity.In my opinion these decisions where made on a political basis without regard to the technical problems. I believe this author has right idea, if these ideas where implemented we would go along way to reducing the import of energy. We do not have the time implement the present policies to reduce the import of energy.

Posted by doninvestor | Report as abusive
 

Mr. Swann, I really so ignorant of the pollution issues with fracking for natural gas. Compared to coal, it is even worse since coal at least doesn’t require a huge amount of water resources to mine (though the residue of coal dust and strip mining of mountains certainly has ruined many water resources).

The gas industry refuses to release the toxic components put into the water during fracking. And it is toxic, no doubt. Water brought to the surface and left in pools is absolutely deadly as many a poor farm animal has found out that accidently drank from one of these pools.

The whole natural resources industry: oil, coal and gas has made its fortune by dumping onto states and local government the toxic residue of their operations. Their whole PR effort, which your article seems to be a product of, tries to push the economic benefit over the environmental disaster.

However, let’s be very honest. How long has man lived without natural gas? How long would man live without clean water resources?

Your next article should disclose exactly what the fracking operation entails including the toxic formula pushed into the water system to release the natural gas plus the the toxic chemicals released from the shale. Only then can readers know that Reuters is truly a news organization and not a shill for industry.

Posted by Acetracy | Report as abusive
 

Here we have just one more example of the destructive power of entrenched interests. Apparently there is no public policy too sensible to be thwarted by the energy kings, and no level of neglect of the people’s business too high for Congress to climb.

Posted by Ralphooo | Report as abusive
 

We’ve reached “peak oil” (read about on wiki), and we’re quickly approaching peak gas. Neither of these are long-term solutions.

Posted by KingHubbert05 | Report as abusive
 

Wow Acetracy, you apparrently have no knowledge of coal mining, or gas development. Are you aware of the damage done by acid mine drainage? Have you heard of mine subsidence from long wall or room and pillar mining and how it causes entire aquifers to be drained, creeks to go dry, etc? – and the damage is permanent, not a one time withdrawl, use and treatment like the gas industry is required to do. How about the relative volumes of water used for gas extraction versus the amount of water used (and poluted with fertilizers) by the golf industry? That is just one of the major warter users that make water use for gas drilling and fracking a litteral drop in the biucket. Plus the gas industry is required to capture and treat the water to a degree not required by any other industry. Are you aware that most of the industry has ALREADY disclosed the frack chemicals? Go to Range Resources web site where you can easily get clue regarding the frack chemicals, which are disclosed in detail for every well – Halliburton has also fully disclosed their frack recipe. Your reply sounds like a collection of talking points from liberal blogs and web sites with no connection to reality.

Posted by Amityfarms | Report as abusive
 

Using horozontial hydro fracturing to extract Natural Gas, is unconventional and dirty. As one comment above mentioned, the extraction process for Natural Gas is more polluting to the air than extracting for coal. Moreover, in the Marcellus shale there are radioactive components in the shale that can surface through the drilling process. Moreover, the quality of the aquifers and the water reservoirs are the most important components to sustain life. We cannot put them at risk.

The industry has over estimated the reserves. Because of rock-bottom gas prices, the unconventional methods to produce gas costs more than the revenues it generates. Economically, this is red ink on the bottom line. No matter how productive a well is, there are no profits. Each well has a very short productive life of only a few years. Therefore many thousands of wells will have to be drilled increasing costs and endangering other industries such as, for example, farming, tourism, and small businesses a such a breweries all depending on good drinkable water.

Public funds should not be used for the fossil fuel industry, they have enough subsidies and these scarce funds would be better spent in retrofitting homes and commercial buildings to conserve energy and on light and rail mass transportation as well as supporting small business enterprises. This would be an immediate boost to economically suffering communities.

We are in the 21st Century. It is time to think differently and boldly. The health of our environment demands it.

Posted by grammym | Report as abusive
 

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