Spot prices for crude oil and liquefied natural gas, or LNG, have risen disproportionately to the low price of natural gas on the U.S. market.
"Why didn't natural gas bounce like its two other energy brethren?" Barnes asked. "That's easy. Once the United States discovered an abundant supply of natural gas in its shale basins, the fear that this country would run out of this critical source of energy basically disappeared. This new supply of natural gas is changing the way the United States views energy. In the past, we expected to have to use imports to meet our energy needs. But that may not be the case going forward."
While many readers applauded the insight, the following comment on Barnes' article posed a commonly asked question regarding U.S. energy policy:
Excellent article... why hasn't the current administration pushed the natural gas subject?
- Jim S.The natural gas industry is a game-changer in the future of U.S. energy, but it has to clear hurdles like the U.S. government's indecision and lack of action to flourish. Despite proposed energy measures, no one in Washington seems to have yet agreed on the question, "What policy changes make the most sense?"
While many natural gas advocates want the government to make more energy changes, no policy proposals have been strong enough to gain much traction.
The U.S. government's lack of aggressive energy measures supporting natural gas is a growing frustration among energy experts and consumers. Government support is a key factor in developing natural gas usage in the United States, but with government spending already astronomically high and Congress in a constant state of political gridlock, making headway any time soon is unlikely.
The financially strapped government has even tried to impose fees and regulations on the natural gas industry to make money off the boom. Yesterday (Thursday) two groups representing natural gas drillers spoke out against recent permit fees proposed by a legislative subcommittee. The West Virginia Oil and Natural Gas Association and the Independent Oil and Gas Association said the fees, along with proposed drilling location restrictions, would hurt small operators and cripple the fast-growing industry. The proposals affect drilling in the Marcellus Shale gas acreage.
But the country is in the lucky position of sitting on an abundance of natural gas reserves, and until the United States begins exporting liquefied natural gas, there will be a cheap domestic supply booming from regions like Marcellus. If the United States starts shifting its main source of transportation fuel to the increasingly popular natural gas, it'll be able to reduce its dependence on foreign oil, something many industry experts have been concerned about for decades.
The "PickensPlan" for energy security, offered by U.S. financier T. Boone Pickens, highlights the importance of this shift:
"Transportation has to lead the way - it accounts for two-thirds of our oil imports. No energy strategy can be effective unless it promotes the use of domestic natural gas as a transportation-fuel-alternative to foreign oil/diesel, and the focus has to be on America's eight million heavy duty vehicles. The NAT GAS Act, a bipartisan bill proposed in both sides of Congress, would advance the use of natural gas as a transportation fuel."
The NAT GAS Act's goals include subsidizing the conversion of long-haul trucks to run on compressed natural gas. While Pickens was optimistic earlier this year that Congress could pass the NAT GAS Act by the end of this year, he announced this week at the Creativity World Forum in Oklahoma City he expects the issue to be tabled at least until next year.
But with the reasons stacking up for turning to a more natural-gas-focused transportation industry, the U.S. government will face increased pressure to start making energy policy a priority.
(**) Money Morning editors reserve the right to edit responses for grammar, length and clarity when posting on our Web site. Please include your name and hometown with your email.
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