America is addicted to natural gas
It doesn’t have the same ring as “addicted to oil,” but it’s true. As energy industry insider Michael Economides argues on ForeignPolicy.com, America consumes a lot of natural gas and we’re growing increasingly dependent on foreign sources of it. And when the gas market gets global enough, he says, we’ll see a natural gas cartel. ...
It doesn't have the same ring as "addicted to oil," but it's true. As energy industry insider Michael Economides argues on ForeignPolicy.com, America consumes a lot of natural gas and we're growing increasingly dependent on foreign sources of it. And when the gas market gets global enough, he says, we'll see a natural gas cartel. (As if OPEC weren't enough to deal with).
I checked out what our own Energy Information Administration had to say about it, and it confirms (pdf): “With U.S. natural gas production declining, imports of natural gas rise to meet increasing domestic consumption.”
Unlike the market for oil, which is truly global, today natural gas is mostly regional because it’s difficult to transport. But it’s becoming more global as more countries build the infrastructure they need to export and import liquified natural gas (LNG). The BP map to the left shows the major gas trade movements of 2005 (click to enlarge). In the coming years, many more pipelines and LNG routes will be added to this map. Which means a supply disruption in say, Russia, Qatar, or Iran will drive up the cost of gas worldwide — just like with oil today.
For now, the problem is regional. But it’s never too early to think about future energy supplies (just ask the British). That’s why today’s WaPo oped in Russia’s natural gas woes by Nadejda M. Victor is a must-read:
[O]utput from the country’s mainstay super-giant fields is also steadily falling.[…] Analysts have ignored the risk that Russia’s supplies could fall short because they focus on Russia’s vast gas resources and the new Western investors who are — albeit cautiously — entering into joint ventures with Gazprom. But those resources and ventures are for the long term, and the looming crisis of supply is unfolding now.
That’s definitely bad news for Europe and Central Asia, regions Russia supplies. Victor says Russia needs a huge influx of cash from Western countries to boost gas production in the years to come. But energy-industry lead times are long, and it’s unclear if all that investment will be big enough and fast enough, even if Putin opens the floodgates tomorrow. (For more on gas production, see this post at the Oil Drum).
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