Natural gas is too cheap and too plentiful

Michael Giberson

Russel Smith thinks we should use government power to limit natural gas production in order to boost gas prices. Why? Because he is the executive director of the Texas Renewable Energy Industries Association and cheap and plentiful gas is cutting into the business opportunities of renewable energy companies.

“The price is so low, there’s so much being produced, and it’s perverting the effort to move renewables into the marketplace,” he said.

He continued:

With the addition of shale gas to the marketplace and continuing low gas and power prices, Smith said renewables have been unable to gain the traction that was anticipated a few years ago.

“Because prices are so low, the momentum to bring large-scale solar and wind, especially solar, to the market has been somewhat stymied,” he said. “The differential in the price of natural gas and solar wasn’t there five years ago as momentum was building.”

The article said Smith initially suggested the idea of regulating gas production to spark discussion during a conference panel. (Reminds me of the Adam Smith quote on business gatherings: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”)

If he can’t convince regulators to limit gas production, Russel Smith suggested that government could do more to boost demand for natural gas: exports, LNG for long-distance trucking, anything that might help boost the price of the competition. Such moves would, said Smith, “improve the situation for natural gas and everyone else.”

Not quite everyone else, right?

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3 thoughts on “Natural gas is too cheap and too plentiful

  1. Seems to me we’ve tried federal natural gas price controls previously. I remember how well that worked. I also remember the “sausage making” at FERC required to “walk it back”. UGH!

    “Those who cannot learn from history are doomed to repeat it.”, George Santayana

  2. I’d sure love to know when this fellow is going to give a talk someplace, just so I could attend with a sack of rotten eggs and overripe tomatoes. At least, that’s what I’d toss to a pig who wants to eat at my expense.

  3. Another Adam Smith quote is more to the point: “The proposal of any new law or regulation which comes from [dealers] ought always be listened to with great precaution, and ought never be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”

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