tag:blogger.com,1999:blog-4664957094233317169.post5692207804606748651..comments2023-12-26T05:33:56.740-05:00Comments on John Hanger's Facts of The Day: Natural Gas Doubles Electricity Market Share: Why?John Hangerhttp://www.blogger.com/profile/06565915866938789295noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-4664957094233317169.post-65087436740706035192011-08-16T11:55:30.997-04:002011-08-16T11:55:30.997-04:00I totally agree that a focus alone on the supply s...I totally agree that a focus alone on the supply side of all energy markets is a huge policy and consumer error. But there is some good news here. President Obama has won two increases in the corporate average fuel economy standards (CAFE), with the most recent one being a real game changer to 54.5 mpg. His administration has also rolled out the first standard for heavy trucks. On electricity, appliance efficiency standards are going up for air conditioners and many other appliances. Buildings codes where they exist are moving toward higher energy efficiency minimums, though the Pa Homebuilders are pushing back hard. Demand Response within PJM is now at a large and still growing 15,000 megawatts. Demand response is another game changer. Then market price of gasoline reaching $4 has also been a blunt instrument forcing some consumers to change behavior--move to more fuel efficient vehicles, consider where they live, explore car pooling or public transit. The opportunities on the demand side of these markets in the US are immense.john hangerhttp://www.johnhanger.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-4664957094233317169.post-51639542807740158222011-08-16T10:27:13.653-04:002011-08-16T10:27:13.653-04:00All points are well taken, especially with regards...All points are well taken, especially with regards to gas and renewables gaining market share, reducing coal's dominance; however, there is a difference between the $6 gas you refer to and the current $4 gas (a difference of $2, I believe). Coal is still economically competitive, so it's not going anywhere anytime soon. As the stronger players weed out the weak, I would imagine fewer players with higher share of the supply (consider the deepwater in the GOM). With a better grasp on the supply and economics, I would imagine the industry would allow the gas glut to gradually work itself out, with prices rising slightly.<br /><br />Potential for export LNG and a globalized market is also another factor to consider that might have a significant impact on domestic supply and price. If we have 100 years of natural gas at 20 TCF per year, then that is about 2000 TCF (price considerations aside). If we ramp up to 25 or 30 TCF per year in the next twenty years, then we are looking at 65 to 80 years of gas. If we consider the differences in geology, land use, and available inputs (such as water), and required infrastructure, then that 65 to 80 might be further reduced.<br /><br />As a member of a slightly younger generation, I would hope that in the next 40 to 60 years of my life, the U.S. will suddenly have the foresight to come up with an energy policy that doesn't solely revolve around drilling/mining for more resources at increasingly higher costs. (Wishful thinking, I know.) Although gas represents a "bridge fuel" with many undeniable benefits, it also represents an opportunity to allow our leaders to procrastinate and encourage supply-side solutions, while ignoring the huge amount of wasted energy and negative externalities associated with drilling for oil and gas and mining coal.<br /><br />My concern is that by the time we near the end of the bridge at an accelerating rate of travel, we still will not have addressed the basic need to conserve energy and limit waste through proper leadership, investment and education.<br /><br />I also hope that industry will do a better job of overseeing pipelines and safety than it has in the past. It shouldn't be the public's burden or responsibility to ensure that industry is sticking to the highest of standards. Short term economic gain seems to be the number one priority (consider any API response to any safety/environmental management proposal that would increase costs for industry in any way... if that's the best industry can do, I think we are in for more of the same.)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4664957094233317169.post-34923761871711080452011-08-16T09:40:09.175-04:002011-08-16T09:40:09.175-04:00Renewables will continue to grow and natural gas i...Renewables will continue to grow and natural gas is a very good complement to renewables. As you point out, we need a backup for when the wind isn't blowing and the sun isn't shining. Gas is also much better for heat than any other fuel. <br /><br />The anonymous poster is probably right that having too many eggs in one basket leaves us at the mercy of the oil and gas companies. We have been at their mercy for transportation fuels for a long time. Most of the time this seems to work out OK but recent price increases do show how this can impact the economy in a negative way. On the bright side, if a natural gas and electricity market can open up for transportation then we will have more diversity in that market than we ever have, at least in part due to the rise of shale gas.Concerned Scientistnoreply@blogger.comtag:blogger.com,1999:blog-4664957094233317169.post-6974562815597274722011-08-16T09:21:13.178-04:002011-08-16T09:21:13.178-04:00Thanks for this John
From an environmental perspe...Thanks for this John<br /><br />From an environmental perspective, this is excellent news and this story should be on the front page of all major newspapers. We will cut air pollution significantly and also cut greenhouse gas emissions by at least half. Coal is far worse for surface and groundwater pollution than gas. <br /><br />Although you wouldn't know it from the way their citizens rail against shale gas, large eastern cities like Philadelphia and NYC benefit enormously from lower gas prices. The citizens of NYC alone probably saved $2 billion last year over years previous due to lower gas prices. At a time when other energy costs are up and the economy seems to be teetering on the brink of another collapse, this has got to be welcome news.Concerned Scientistnoreply@blogger.comtag:blogger.com,1999:blog-4664957094233317169.post-73259254694081855882011-08-16T09:18:55.963-04:002011-08-16T09:18:55.963-04:00You are right that there are uncertainities and to...You are right that there are uncertainities and too much reliance on any one fuel is a bad idea or fuel diversity is a good idea. <br /><br />But the growth of gas is consistent--at least for 10 years--with increasing fuel diversity.<br /><br />Coal was at 50.8% of market share in 2003. A lot of eggs were in the coal basket. We are heading to an electric generation market where coal and gas will be equal shares around 33%. With then all sorts of renewables--hydro, wind, solar, biomass, geothermal--at about 20%. And with nuclear at about 15%. That mix would be more diverse than the time when coal was dominant.<br /><br />Of course, I also think over the next 25 years gas and renewables will continue to grow, while coal shrinks and nuclear struggles to hold a 15% market share. At that point, we would be putting a lot of eggs in the gas and renewables baskets.<br /><br />Could gas go off the tracks? Yes. Are the odds high that it will? No. Gas has been gaining market share for 30 years and shows no sign of not continuing to do so. The shale gas revolution is real. There is a huge amount of shale gas that can be produced for $6 per thousand cubic feet. Gas plants with their other large advantages will remain very competitive and attractive with gas at $6.<br /><br />There are uncertajohn hangerhttp://www.johnhanger.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-4664957094233317169.post-68135057220531850692011-08-16T08:50:09.746-04:002011-08-16T08:50:09.746-04:00All of your comments championing natural gas for p...All of your comments championing natural gas for power generation seem to ignore some inconvenient uncertainties in the market place.<br />For example, as the shale industry evolves through M&A, how will price change?<br />http://www.ogfj.com/index/article-display/7473377105/articles/oil-gas-financial-journal/unconventional/playing-a_smart_shale.html<br />I would expect M&As to improve operation efficiency and reduce costs, which would be a win-win for industry and the public; however, the costs of inputs and drilling equipment are rising right now, not falling.<br /><br />There is a glut of gas right now; will producers continue to drill to ramp up supply when they can make more money by not drilling or by moving to liquids-rich plays? Will it be possible to drill enough wells and build enough infrastructure to reach the projected levels of production? Some people don't think so.<br /><br />It all looks good on paper, but unless you have a crystal ball, I would argue that diversified generation portfolios are key to maintaining flexibility and the lowest rates possible in the face of economic and environmental uncertainty.<br /><br />I'm all for a cleaner environment, but I am also weary of any over-dependence on a single fuel.Anonymousnoreply@blogger.com