On Monday Tech Central Station ran a good article by Terry Barnich, a fellow Chicagoan and also a former utility regulator. Barnich is in a good position to analyze the current natural gas situation and make recommendations:
State utility regulators, working cooperatively with electric power producers can accelerate the displacement of older, less efficient power plants with new gas-fired plants that employ modern technologies that nearly double the electricity output for the amount of gas used. By undertaking this task with a modest sense of urgency they could be in place to free up gas to the market to ameliorate any shortage this winter.
Ten years of government policies encouraging the use of natural gas have succeeded too well. As a former utility regulator in Illinois, the nation’s largest user of gas for residential heating, I am familiar with the roller-coaster nature of our public policies on natural gas and the endless possibilities for unintended consequences of those policies.
The rest of his argument highlights the importance of technological change in delivering cheaper and higher quality functionality in many, if not all, of the aspects of our lives, including power. It can also deliver environmental quality more cheaply, because one thing that often gets lost in the shuffle is that if energy consumption gets more expensive, and we have to bear the cost of our consumption, we’ll consume less, which means we’ll pollute less. Barnich’s argument complements that point, by showing how technological change can enable us to maintain the amount of heat and power we get, but to get it with less energy input and less emission output.
Today Tech Central Station published an article by Ed Reid, who I have known for a while as one of my energy go-to guys and who has been involved in the natural gas industry for decades. He makes a strong argument for a more balanced portfolio approach to energy, as opposed to hanging our hopes and our rigid regulatory mandates on single sources like natural gas. He also shows the numbers and does the math to show that the current degree of natural gas consumption for electricity generation is unsustainable. His conclusion is going to come back, I’m sure, as Congress debates an energy bill this fall:
Far too much of the discussion regarding the energy future of the U.S. is focused on “silver bullet” solutions to our energy problems. Our future energy supply portfolio must include more than a single source of energy, or we will be at far greater risk of energy shortages than is the case today.
Both of these arguments are complementary, and are also complementary to the argument I made at Tech Central Station in June that the existing regulatory environment is one of the primary reasons why natural gas prices are currently high and volatile.