Note: This article is a sidebar to this issue's feature story, "Where the Antelope (and the Oil Companies) Play."
Since last spring, Congress, the White House, economists, consumer groups and business leaders have been sounding the alarm about a natural gas crisis. While there’s plenty of disagreement on the cause and the solution, nearly everyone seems to agree on one thing: The crisis is real.
“This is a full-blown national energy crisis, whose dimensions we’re just really beginning to appreciate,” says Randy Udall, director of a green-leaning think tank, Community Office for Resource Efficiency, in Aspen, Colo. “I don’t think people on our side really get it yet — what a bind we’re in, short-term.”
In the United States, we get 85 percent of our natural gas from our own country, but those reserves are being depleted. Thousands of new gas wells will be drilled in Texas this year, but because drillers are tapping small, leftover pockets of gas, Texas’ total production will be one-third less than what it was thirty years ago. In Canada, source of most of the rest of our natural gas, production will soon begin to decline for similar reasons: The sweet spots are drying up.
Foreign sources are out of reach for now, because, unlike oil, natural gas is very difficult to ship overseas. It must be liquefied, by chilling it to 260 degrees below zero under high pressure, and handled by special ports and special tankers.
At the same time, U.S. demand for gas for power plants hits a new high every year. Gas used to be largely a seasonal fuel, heating homes in winter, but we’re on a binge of building gas-fired power plants, with more than 300 new ones being built from 1998 to 2005. Power plants extend the demand year-round, especially in the fast-growing Sunbelt states, with all their summer air conditioners.
Given the uncertainty over supplies, how did Americans decide that just about every new power plant since 1998 will be gas-powered, without shifting to other options?
“Because the energy policies this country has pursued for so long are so misguided,” Udall says. “It’s like we’re flying in an airplane, and nobody is in the cockpit.”
But really, the industry and the Bush administration are at the controls, says Peter Morton, an economist with The Wilderness Society. Short-term, we have enough gas fields already in production to meet the demand, and gas prices have spiked only because of a lack of pipelines and other infrastructure, Morton says. “The administration is exaggerating the crisis, exploiting the current price spike.”
Even Morton sees a long-term crisis, though. Demand for gas will increase another 60 percent by 2020, according to the federal Energy Information Administration. That demand can be met only three ways, none of them easy: by building a massive system of ports and fleets that can handle liquefied gas; by building a pipeline to reach gas fields in Alaska; or by drilling everything that can be drilled in the Rocky Mountain states, which are estimated to contain about 41 percent of our remaining reserves.
The industry and its political allies have made the Rockies top priority, calling the region our “Persian Gulf of natural gas.”
“We need to protect our economic and national security” by speeding up drilling in the Rockies, Assistant Interior Secretary Rebecca Watson, a former industry lobbyist, told a congressional committee in July.
The crisis has even sucked in Federal Reserve Chairman Alan Greenspan, who has testified in Congress several times this summer, saying the emphasis should be on importing liquefied gas. Greenspan warns that drilling in the Rockies conflicts with environmental values — “a very fundamental value that all human beings are attracted to.”
Green economists emphasize that we can’t drill our way out of the problem, because there isn’t enough gas still in the ground in the U.S. to meet long-term needs. Instead, they call for more energy conservation to reduce demand. “We have lots of opportunities to use gas more efficiently than we do today,” Udall says. “There are 60 million hot-water heaters running on gas in U.S. homes, and those things are only a little better than 50 percent efficient, yet we know how to make heaters that are 90 percent efficient. The Bush administration isn’t addressing that — they just want to drill.”