1
Natural gas incentives up against coal
A natural gas-powered electricity-generating plant in Middletown, Conn.
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
TEXT OF STORY
Steve Chiotakis: President Obama addresses the nation's top CEOs at a business roundtable meeting scheduled later today. He's expected to roll out a proposal to incentivize coal-burning power plants to switch to natural gas. From Washington, Marketplace's John Dimsdale reports.
John Dimsdale: Natural gas burns much more cleanly than coal, and new technologies have uncovered domestic reserves of gas. Prices have been coming down.
Steve Nadel at the American Council for an Energy Efficient Economy says gas-fired utility plants are becoming more attractive.
Steve Nadel: From an efficiency point of view, the gas would be better. But we do have lots of coal and there's a lot of political implications about where the gas comes from. So it gets pretty complicated.
Coal is still cheaper than gas, and coal means lots of jobs for economically-depressed parts of the country, like Appalachia.
Energy analyst Bob Lee with Charles River Associates says rightly or wrongly, the president's picking a winner and a loser.
Bob Lee: If the economics were such that gas was superior, the government wouldn't have to step in in that case. So the fact that the government has to step in and try to push producers toward gas and away from coal means there is an economic cost to be paid somewhere.
Big oil companies would be among the winners. They've invested a lot in the future of domestic natural gas.
In Washington, I'm John Dimsdale for Marketplace.
The primary new market for natural gas should be transportation (18-wheelers, trucks, and cars). This article does not compare natural gas to petroleum/gasoline. Natural gas is cheaper and cleaner than gasoline and new technology allows the U.S.A. to have a 100+ year supply from shale. A simple tax credit for installing compressed natural gas distribution alongside gasoline and converting auto plants to build these vehicles could result in converting 50% of vehicles to natural gas in less than 10 years. It would not reduce tax revenue in the short run, as this investment wouldn't occur anyway if there was no tax credit, but would have tremendous affects on America as follows: Significantly lower dependence on foreign oil (less reason for some wars), would significantly increase tax revenue in the long-term (help address the nations debt problem), reduce unemployment significantly by creating US jobs in natural gas industry and automobile industry and circulation of money in the US instead of sending $400,000,000,000 every year to other countries for oil. P.S. - would lower cost of food also because you would do away with ethanol, which gets a crazy tax credit for a fuel that LOWERS mileage, shortens life of engines, and takes crop acreage away from food production thus raising the cost of food. Natural Gas power plants are more attractive versus coal mainly considering pollution; attractive versus nuclear considering worst case scenarios; attractive versus solar because cheaper, solar cells take more power to make the cells versus what they generate, and sun shines brightly average of only 5-7 hrs/day; attractive versus hydro due to distance transmitting electricity for most dams and limited number of commercially viable dam locations; and attractive versus wind because cheaper, wind doesn't always blow, and windmills don't like cold weather.
