Natural gas boom leads to exports, could increase U.S. fuel prices

With expanded drilling and new fossil fuel extraction technologies deployed, a domestic natural gas boom is depressing overall electricity costs, particularly for those power companies that buy or produce power from natural gas-fired sources.

However, U.S. natural gas producers are looking to offload their supplies on foreign markets in a move that could cause rising energy costs for U.S. energy consumers.

According to the Associated Press, companies like Sempra Energy and Exxon Mobil are asking for federal permission to sell nearly 30 billion cubic feet of natural gas per day.

In a case of not being able to have your cake and eat it too, the U.S. could keep more of the natural gas and use it for power generation, this helping to keep energy costs low. Conversely, the country could allow energy companies to ship more of the product to markets worldwide and pocket the profits.

It is up to the Department of Energy (DOE) to consider how much of these sought-after export projects to allow. If every permit under review were approved, the U.S. could be shopping off 40 percent of its liquefied natural gas, according to the AP report.

As it considers the permits, the DOE must weigh the benefits that selling the LNG would have for energy producers and the trade deficit against the effect it might have on energy costs and the price of manufactured goods.

The DOE has said it will decide each proposed export project on its merits. The Obama administration has not said whether it plans an export-heavy approach or a plan that would keep more of the nation’s natural gas within U.S. borders for domestic use.

Natural gas production has jumped by a third since 2005, according to the Energy Information Administration (EIA), with U.S. producers extracting a record 25.3 trillion cubic feet in 2012.

As this production glut keeps prices low, producers are increasingly eyeing markets in Europe and Asia, where supplies are low and prices are high.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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