Real Talk: Rising U.S. Natural Gas Prices Aren’t Just A Supply Issue But A Policy One
Natural gas prices in the United States and across the globe are forecast to reach highs this winter not seen since before the shale revolution changed the dynamics of U.S. energy markets. And while it’s true that demand is currently outpacing supply, that’s not because the country has suddenly run out of natural gas.
As USA Today reports:
“Are we going to run out of natural gas? Not anytime soon. [Tortoise Capital’s Rob] Thummel called the U.S. the Saudi Arabia of natural gas and estimated that the nation has a 100-year supply underground.
“But what about the infrastructure needed to transport natural gas? That’s in short supply.
“Basically, the U.S. doesn’t have enough export facilities, pipelines and storage to quickly increase capacity, Thummel, said. What’s more, he added, investors have rewarded energy companies in recent years for returning cash to shareholders rather than investing in new production. This confluence of events is undermining access to the fuel used to run your furnace.” (emphasis added)
In fact, Potential Gas Committee’s recent biennial analysis of U.S. natural gas reserves found the United States has nearly 3,368 trillion cubic feet of recoverable natural gas:
“The Atlantic Area ranks as the country’s richest resource area with 39 percent of total U.S. gas resources, followed by the Mid-Continent with 18 percent, the Rocky Mountains with 17 percent, and the Gulf Coast (including the Gulf of Mexico) with 16 percent.”
According to PGC, most of the nation’s natural gas resources can be found in the Atlantic Area of the country, home to the prolific Marcellus and Utica shales.
Activists push for delays and cancellations
For the past several years, activists have fought against building new and needed pipeline infrastructure to get the abundance of U.S. natural gas from shale fields to consumers.
Nowhere has this played out more severely than in the Northeast where project after project has been delayed by activists’ lawsuits and states like New York and New Jersey rejecting permits under Section 401 of the Clean Water Act.
The result has been a series of pipeline cancellations that had been proven as a necessity to meet increased demand in constrained markets in those states and across New England. As Pa. State Senator Camera Bartalotta (R) said at a recent press conference:
“Activists are working day and night to stop the progression on all levels with frivolous lawsuits…[It’s] not a lack of natural resource, a shortage of capable workers or an unwillingness to adhere to environmental regulations. The real threat comes from lawmakers and environmental extremists who do not understand or appreciate how important the oil and gas industry is in our daily lives.”
At the same event, Pa. State Senator Gene Yaw (R) further explained:
“We could do more, but we need pipelines. To benefit from the resources that we have, we need infrastructure; we need more pipeline capacity to get our products to market. We can’t build pipelines, but other states in the Northeast can buy gas from Russia. There’s definitely, in my mind, something wrong with that picture.”
Proposed Domestic Energy Policies Threaten to Make Matters Worse
Further exacerbating this issue has been domestic policies that threaten to worsen the energy crisis. The federal oil and gas program is riddled with uncertainty after an illegal ban on leasing was implemented in January and several measures that would raise the cost of development on federal lands and waters are currently being debated as part of the reconciliation package in Congress.
Also on the reconciliation agenda – a potential tax on natural gas that could raise consumer energy bills an average of $84 to $242 annually, despite already increasing costs.
In a CNN Town Hall this week, President Biden acknowledged that he has no “near-term answer” to address rising energy prices and that “it’s going to be hard” on Americans in the meantime.
And while the president was specifically discussing gasoline prices at the time, he offered no solution to rising natural gas prices either.