A Gas Crisis, or Not?

The conclusions made by the NPC gas study raise more questions than they answer.

In late September of 2003, the National Petroleum Council (NPC) issued a comprehensive study on the future of the U.S. natural gas industry.1
Balancing Natural Gas Policy-Fueling the Demands of a Growing Economy accentuates the pursuit of an aggressive national supply-expansion policy and increased responsiveness to changing market prices. The study estimates that gas costs will fall by some $1 trillion over the next 20 years (which averages out to $50 billion per year, or about 40 percent of the current total natural-gas expenditures in the United States) from a balanced future of increased energy efficiency, immediate development of new natural gas resources, and flexibility in fuel choice. The savings would be $300 billion from increased access to U.S. natural gas resources alone.

Major Costs

While on the surface the general findings of the study seem sensible, a serious debate should ensue over the costs of attaining the more balanced U.S. natural gas industry that the study advocates. One cost pertains to the environmental effects of expanding domestic natural gas supplies and liquefied natural gas. A second involves the cost of subsidies (for example, federal price support guarantees and tax credits) that may be required to increase supplies from particular new and existing sources. A third is the economic cost associated with advancing energy efficiency and fuel switching by industrial customers and electric generators.