Historically, natural gas prices have been very volatile and, despite the current glut, there is no reason to believe that supply will so greatly outstrip demand in the long run. The big energy players in natural gas, companies like Chesapeake, Cabot and Chevron, are working hard to create new markets, increase demand and thus get prices back up. A major South African chemical company recently announced plans to build a plant here that will produce gasoline from natural gas feedstock. Several players in the energy market are in the initial stages of planning Liquefied Natural Gas (LNG) terminals with exports to Europe and Asia in mind. There are plans in the works to create more natural gas infrastructure so that the nation’s truck fleet will convert over from diesel to natural gas.
Perhaps most importantly, using natural gas to generate thousands of megawatts of power will consume huge quantities of the fuel, thus necessarily causing prices to rise as more new power plants come on line. It’s no surprise that the two big manufacturers of natural gas fired-turbines – GE and Siemens – have been flooding the airwaves with commercials extolling the virtues of their wares. Both companies stand to make a whole lot of money in the next few years thanks to the Obama administration’s all-out war on coal.
In contrast to the volatility of natural gas prices, coal prices have always been pretty steady. Thus the coal fleet (along with the nuclear fleet) has helped to dampen out any fluctuations in natural gas that affects that relatively small portion of energy production in the United States. As we shift away from coal and put more of the energy burden on natural gas, electricity prices are likely to fluctuate more than they ever have and are likely to increase substantially over the long term as well.
It’s a shame that we’re knowingly abandoning such a cheap, reliable and plentiful resource like coal in a foolish effort to fulfill a ridiculous crusade led by eco-puritans. It’s maddening that such a decision was made not by Congress, nor by the voters, but by a few faceless bureaucrats hiding behind global-warming pseudo-science that has become the twenty-first century’s version of alchemy. But that’s where we are and, unless something changes this November, that’s where we’re likely to be for quite a while.
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