More On Natural Gas Economics And Politics

A good article from Oil & Gas Journal on the natural gas supply concerns in the U.S., highlighting in particular Alan Greenspan’s remarks on the matter on Wednesday. The article does a nice job of pointing out the political dimensions of this essentially economic issue. I especially like Greenspan’s understanding of the benefits of integrated global energy markets, not focusing on balkanized domestic production when it can be done more cheaply elsewhere:

But, Greenspan rejected assertions by Tauzin and other lawmakers, including Rep. Joe Barton (R-Tex.), that the US needs to boost domestic production to stabilize prices and reduce reliance on potentially unstable foreign energy suppliers.

“If North American natural gas markets are to function with the flexibility exhibited by oil, unlimited access to the vast world reserves of gas is required,” Greenspan said during his testimony.

Later in an exchange with Barton, Greenspan said the US is “committed irrevocably to globalization for a good reason,” and that “it is in the interest of the country not to be protectionist. We don’t have a choice.”

This Christian Science Monitor article also provides a good analysis of the issues involved in the natural gas markets, and in the political debates over the House and Senate versions of the energy bill.

And this New York Times article highlights the conflicts over offshore drilling for oil and natural gas, and even over doing the exploratory inventory work to see what deposits there are and how difficult and/or expensive it would be to extract them. Again the old-style environmentalist voices in this debate (as illustrated in this article by Bob Graham and Barbara Boxer) see this exploration as the first chink in the armor, and that it will inevitably lead to the destruction of all of the offshore drilling bans that have been in place for almost a quarter of a century.

In debating the Senate energy bill S.14, the Senate has voted to approve such an exploratory inventory. This provision would enable the Department of the Interior to survey coastal areas to determine the reserves of both oil and natural gas, and the feasibility and expense of extracting them. Such knowledge is a good input into making informed decisions about whether or not it’s worth incurring some environmental disamenities to achieve the added benefits from increased domestic fuel supplies.