On January 16th CNN posted a news story regarding the demands posed by an arctic weather front which contained the quote, “The weather has created high demand for electricity, and as a result some power generating plants ran out of natural gas Thursday and increased the burden on other plants, according to ISO New England.” As this story began to circulate it was quickly realized that panic might follow a confirmed announcement of gas shortages. The following day, Connecticut’s New Haven Register published a banner story headlined Natural Gas Alarm Spurs Probe” which opened with the lead:
“There is no natural gas shortage.
“But in an investigation also launched Friday, State Attorney General Richard
Blumenthal alleged that profiteering power-generation companies nearly forced
blackouts in New England Thursday. Blumenthal said that electrical-generation companies sold fuel needed by their power plants on the spot markets to capitalize on soaring prices for natural gas.”
Blaming the power companies for these events is a weak attempt to disguise an ever-more-apparent catastrophe looming in the near future for North America. Experts familiar with natural gas production figures understand that this is just the beginning of what is to come. Australia’s THE AGE reported on January 14th that, “Australia is confident it can win liquified natural gas contracts with the United States worth up to $50 billion, amid warnings that America is facing a looming energy crisis.”
In describing the new LNG contracts The AGE went on to report: “American liquefied natural gas imports are expected to increase ten-fold over the next six years and total US energy consumption is expected to surge by about 32 per cent over the next two decades.
“The Bush Administration has admitted that America's capacity to meet its voracious hunger for energy through domestic production is limited.
“[Energy Minister] Macfarlane warned that the US could face an energy crisis that would rival the 1973 and 1980 oil price shocks. Both events triggered a combination of soaring inflation and economic stagnation in the major economies of the world. ‘The US has only very recently become open about their energy requirements, and some say it's as big a crisis, or potential crisis, as during the oil shocks,’ he said.”
The difference is that in past oil shocks there were other places to go to obtain immediate supplies. Given the fact that LNG imports require huge, costly and dangerous terminals which don’t exist, and a tanker fleet which has not been built, the comparison falls short. With the crisis now firmly on the table it is time for a close and honest look at the real natural gas production numbers and to understand that significant LNG imports are perhaps a decade and billions of dollars of investment away. They will certainly not be enough -- or in time -- to prevent what is becoming a stark reality. FTW’s Energy Editor Dale Allen Pfeiffer takes us through the hard, cold and unforgiving numbers. – MCR
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