Gas Prices Are Down, Too–And That’s What Matters for Clean Energy
For all the talk of how plunging oil prices threaten the clean energy sector, it’s really the separate-but-related fall in natural gas prices that matters. And natural gas is now at a two-year low.
Henry Hub gas futures in New York are trading around $4.90 per million British Thermal Units, the first time gas contracts have been trading under $5 since September, 2006, and gas prices are now 64% off their summertime high.
Why has gas fallen so much? For pretty much the same reasons oil has fallen. Natural gas supplies are plentiful, for starters. The dismal economy is tamping down demand, especially among industrial users. More specifically, big stockpiles of natural-gas substitutes like heating oil are building, putting more pressure on gas prices even in the middle of winter.
Granted, natural gas still isn’t cheap by historical standards; it spent most of the 1990s between $2 and $3. And if past is prologue, it can rebound suddenly—natural gas prices doubled in the month following that 2006 trough.
But cheaper natural gas does put pressure on the economics of clean energy, especially wind power, which is already struggling with the fallout of the credit crunch.
If today’s lowish natural gas prices continue—it’s currently below the U.S. government’s official 2009 forecast—that will put an even greater onus on government policy to support clean energy. Most important will be the shape that government support takes, given Washington’s mixed track record of boosting renewable energy. More on that to come.
Wind and solar were not economical at $9 natural gas.
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Don’t worry, though. After the Democrats block nat gas & oil drilling in this country, we will see another super spike in energy in the next 12-24 months, which will make wind & solar more attractive.
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Hope this helps.
Get Real,
I’m interested in what bills the Dems are trying to pass that would block nat gas & oil drilling. From what I have read and experienced (Florida) most of the blocking is being done at a state level (by both Dems and Republicans) but I haven’t seen much at a national level.
I am not aware of any pending legislation. However, the EPA and the BLM are obstacles enough in development of our resources. If you the Secretary of Energy and the Secretary of the Interior, they are far left enviornmentally. And Obama has at least two former EPA officials in his cabient.
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Combine this with the left leaning congress and there is no way that our nation’s resources will be drilled.
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State governments also are a huge problem because they have been high-jacked by the far left.
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Hope this helps.
When we go through all our domestic oil in 10 years, then what?
I guess that makes sense if you consider Republicans a part of the “far left”.
Here in Florida we have a congress made up of 76 Republicans and 44 Democrats and a senate made up of 26 Republicans and 14 Democrats with most of the opposition to offshore drilling coming from the Republicans (they actually introduced the bill under Jeb Bush).
I really don’t see drilling as a Democrat vs. Republican, liberal vs. conservative or left vs. right issue it’s a Not In My Back Yard (NIMBY) issue and the federal gov’t whether it be Republicans or Democrats can pass all the laws they want allowing for drilling but until the citizens who are both Republicans and Democrats approve it what’s the point?
I know Republicans, I guess lefties, throughout the coastal areas of NC, SC, GA, FL and AL who will fight against offshore drilling to the death if they saw it happening in their back yard. I would guess most of them and most Americans would rather use nuclear, gas, wind, solar or even wave energy rather than increase our dependency on oil. Even if we find a spot to drill offshore of the US we are only prolonging our dependency on a resource that is disappearing quickly.
Consumers will ultimately decide. In our most recent energy crisis public opinion went from an attitude of environmental conservation and no drilling to “drill baby drill.”
If the politicians (even in Florida) don’t listen, they will be replaced as is evidenced by the anti-incumbent vote that swept this last election.
Personally I prefer the alternative energy route however, consumers will dictate with their wallets and their votes.
Consumers should remember who is in control of oil prices.
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http://pacificgatepost.blogspot.com/2009/01/consumers-and-volatile-oil-prices.html
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