Fossil industry leaders such as T. Boone Pickens like to tout America’s abundant supplies of natural gas. And of course, they’re right. Due to such robust supply, current prices for the stuff are very, very low.
As the Department of Energy’s Natural Gas Weekly notes, there is an enormous price gap right now between natural gas and oil. For 1 million BTUs, you would pay $14 for oil (before Libya exploded), and just $4 for natural gas.
Notice, too, that while the price of “Brent North Sea” crude today jumped to $106/barrel, according to Bloomberg, the price of NYMEX oil futures was just $91.25. Most natural gas prices had barely budged.
Over the past two years, this has been a huge story for renewable energy, American competitiveness, and the environment.
For renewable energy, it means the price we have to meet in order to compete head-to-head with fossil fuels goes down, and may stay down. If you can’t compete on the market, you need subsidies, which are increasingly hard to come by.
The low price of natural gas is mainly a North American phenomenon, and a North American advantage. Our industry has an advantage against the rest of the world from low natural gas prices. Supporters of natural gas say this boosts the general economy.
Few people are asking how we are getting all this cheap natural gas. Mainly we’re getting it through fracturing, drilling wells and exploding the area around them so the gas comes up the pipe. This can destroy water tables.
(A point of personal disclosure is required here. Relatives in Texas own land once used for oil and gas, and are actively considering offers for new leases, based on fracturing. It’s possible I could make some money off this. I thought you ought to know.)
At the same time as the Department of Energy is boosting fracturing for natural gas, of course, the Department of the Interior is raising environmental objections to wind energy, objections that are getting a lot of support in Canada, where the government of Ontario has just imposed a moratorium on new offshore wind farms. Opponents like Wind Concerns Ontario want to take the moratorium onshore, saying wind turbines are noisy, that they can hurt birds, and that they spoil the view.
Notice something strange here? Destroying the water table is fine, the government says, and boosts American competitiveness, but upsetting a bird is absolutely horrible and must be stopped at all costs?
Place this kind of environmental “politics” on top of the lower price for natural gas produced by fracturing, and you start to see what we’re up against here. Natural gas is cheap because it’s increasingly destructive to the environment, and its low price (plus grassroots pressure against renewables) is holding off the search for alternatives.
While the objections to wind, or solar, or biofuels, that are increasing in their intensity are a problem, they’re not the heart of the problem. The heart of the problem is that we are destroying our water tables and using the short-term pricing advantage of natural gas to give Chinese and German competitors an advantage in the race toward dominance in harvesting the future of energy.