Environment Forum

Goldilocks and the three fuels

ENERGY-MARCELLUS/

– Richard Heinberg is the author of eight books, including “Peak Everything”, “Blackout: Coal, Climate and the Last Energy Crisis” and “The Party’s Over”. He is also a senior fellow with the Post Carbon Institute. The views expressed are his own. –

Recent shale gas projects, including those involving the massive Marcellus Shale in several northeastern states, have been yielding significant quantities of fuel. Reserves of the stuff are enormous. But drilling costs and per-well decline rates are high, so producers can make a profit only if gas prices are near historic highs.

Where are oil prices headed in 2010? Forecasts for the year are all over the map, from more than $100 a barrel to under $50.

The difference hinges mostly on assumptions about whether the economy will recover or relapse. Yet it may be that price volatility has become an inherent feature of the oil market—and fossil fuel markets in general—for reasons that can perhaps best be explained with the help of a little history and an old children’s story.

Once upon a time (about a dozen years past), oil sold for $12 a barrel and a lot of people thought it would get even cheaper because the market was glutted.

Must the natural gas industry clean up its act?

Natural gas is regarded as a relatively clean source of energy but there is mounting evidence that it has a dirty side.

My colleague Jon Hurdle has reported on Wyoming water woes that have been linked to the booming gas industry. You can see his stories here and here.

In August U.S. government scientists reported that they had for the first time found chemical contaminants in drinking water wells near natural gas drilling operations, fueling concern that a gas-extraction technique is endangering the health of people who live close to drilling rigs.

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