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U.S. natural gas surplus stays put

A gasometer stands half-full of natural gas

TEXT OF STORY

Jeremy Hobson: All the talk of the high price of fuel have some people talking about natural gas, which is primarily used for electricity and home heating. Turns out technology has boosted natural gas production so much that there's a glut in the U.S. market. And drillers want permission to sell their surplus.

From the Marketplace Sustainability Desk, Eve Troeh reports.


Eve Troeh: Drillers have figured out how to get natural gas quickly from U.S. shale, through a process called "fracking." There's so much that American companies now want to start exporting it. But, there's a problem.

Matt Smith: Well, currently in the U.S. there's 10 import terminals, and no export terminals at all.

Matt Smith is with Summit Energy. He says reversing the flow of the supply will take at least five years. Some groups don't want to start that process, because the U.S. may need more natural gas as the economy gets better. And if we send it overseas, it'll cost more here.

Smith says there's plenty to go around.

Smith: The U.S. is going to experience a reasonably low level of natural gas pricing for the foreseeable future.

The one thing that would drive up prices is more environmental regulation. While frackers push to export, they're also waiting to see if federal agencies will rein in the very practice that led to the boom.

I'm Eve Troeh for Marketplace.

About the author

Eve Troeh is News Director at WWNO-FM in New Orleans, La., helping build the first public radio news department in the station’s 40-year history. She reported for the Marketplace Sustainability Desk from 2010 to 2013.
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The "fracking" procsss may have at least two issues that might warrant increased scrutiny. First is the chemical make-up of the mixtures pumped into the ground. Do they pose a health hazard? The second is possible contamination of aquifers and surface waters by either these chemicals or the natural gas itself.
Lastly, cheap natural gas may help reduce use of dirtier coal power. However, it will also make solar and wind generation less competitive if we ignore the impact of CO2 emissions.

The logic behind prices being driven up if we saw increased environmental regulation of natural gas production is simply from a supply / demand perspective. We are currently experiencing record or near-record levels of natural gas production in the US, and this is being led by unconventional production (i.e. shale). If we saw environmental regulation impacting shale production, then we would see the supply dynamic of the market change, and hence a corresponding price rise.

Dear Marketplace: I am wondering what the evidence is that environmental regulation of natural gas production would drive up prices, as you claim in your report. Currently, natural gas production is quite under-regulated, with most rules out of date and inadequate enforcement. There are many costs associated with the extensive pollution caused by the industry, and many economic benefits to environmental regulation. In addition, there are technologies available to the natural gas production industry that allow it to operate in much cleaner fashion and are very affordable, even profitable.

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