Resource Insights: “How did U.S. ‘energy dominance’ turn into rising domestic natural gas prices?” Kurt Cobb is the author of a great blog. He states not only are record amounts of U.S. natural gas now being sent abroad in the form of liquefied natural gas (LNG), but much more export capacity is planned. “The U.S. Energy Information Administration forecasts that U.S. LNG export capacity will double by 2029.” Cobb projects this woud mean “considerably higher heating and electricity costs for Americans and much higher costs for American-based chemical manufacturers; for industries that rely on natural gas for process heat in the manufacture of steel and other metals, concrete, and glass; and for farmers who use natural gas to dry crops.”
There has been a lot of talk about U.S. “energy dominance” by which the current administration means policies that maximize production, maximize exports, and yet somehow “reduce energy costs” at the same time. An integral cause of rising U.S. methane gas consumption (and ultimately prices) is the vast expansion of gas-fired power plants by American utilities. “From 2001 through 2024 electricity generated by natural gas has almost tripled while coal-generated electricity has declined dramatically and nuclear and hydroelectric generation have plateaued.” Non-hydro renewables grew 10-fold in that period, now nearly matching nuclear in percentage terms, nuclear at 18% and renewables at 17%.
But “cheap natural gas provided by the so-called ‘shale revolution’ in the U.S. starting in the late 2000s has also prompted considerable expansion of the chemical industry which uses natural gas to make agricultural chemicals (especially fertilizers), methanol, and chemicals such as ethylene and propylene used to produce plastics.” As Cobb notes, all that rising consumption spells trouble for American consumers when it comes to energy costs. The gas industry sold the story of endless abundance in order to get the U.S. Department of Energy to allow expansion of natural gas exports.
“But independent analysis based on the actual performance of gas wells suggests that production will plateau and then decline in the not-too-distant future.” Decreasing extraction of methane coupled with increasing export create a vise forcing price escalation as the public is progressively more exposed to the international market of this capricious commodity. Welcome to so-called ‘energy dominance.’ Great for heavily subsidized corporations, tough for Americans facing higher domestic prices.
