State and federal regulators and the industries we regulate have donned life jackets. It's as if we are boating down the unexplored Grand Canyon with John Wesley Powell1 in 1869. We share a vague...
The Case Against Gas Dependence
Greater reliance on gas-fired power implies serious economic, technological, and national security risks.
Over the past two decades, the United States has, by default, come to rely on an "In Gas We Trust" energy policy. Natural gas increasingly has been seen as the preferred fuel for all applications, nowhere more than in the electric generation sector. However, the greatly increased use of natural gas forecast for the electricity sector may not be economically or technically feasible, and it does not represent optimal or desired energy policy. Rather, a more rational energy policy would be to use coal and nuclear power as the sources of new electricity generation and to use natural gas for the applications for which it is best suited-space heating and industrial use.
The nuclear power industry in the United States has established an enviable economic and safety record, and a revived nuclear power option is essential for a balanced and secure U.S. energy future. The price of coal-fired electricity has been declining for more than 20 years and is forecast by the Department of Energy's Energy Information Administration (EIA) to continue declining for at least the next 20 years. Coal-burning electric utilities also have made impressive environmental advancements: The rate of emissions per ton of coal use has decreased nearly 70 percent during the past 30 years, and this trend continues. 1
Certainly, the recent run-up in natural gas prices has easily made the case for many of the perils of using more natural gas. But as early as 2000, many experts became alarmed when natural gas consumption for electricity generation exceeded the amount used for residential or commercial purposes. By 2025, use of natural gas to generate electricity will equal that used in the industrial sector and will exceed the combined use of natural gas in both the residential and commercial sectors. Total natural gas consumption is forecast to increase 49 percent between 2000 and 2025, from 23.5 Tcf to 34.9 Tcf; however, gas consumption for electric generation will more than double, increasing from 5.2 Tcf to 10.6 Tcf.
Is such a dramatic increase in the use of natural gas to generate electricity feasible without straining gas supply and infrastructure? Government and industry energy analysts have expressed doubts. Even after reducing its forecasts of natural gas use for electric generation twice in the past two years, EIA remains concerned about the adequacy of future gas supplies, cautioning that "a major consideration for energy markets through 2025 will be the availability of adequate natural gas supplies at competitive prices to meet growth in demand." 2 EIA finds that domestic gas production is increasingly dependent on unconventional and costly conventional resources, both onshore and offshore. The 2003 EIA forecast of U.S. natural gas production in 2020 is 3.4 Tcf (or 12 percent) lower than the 2002 projection because of reduced estimates of reserves, changes in the economics of production, and reduced expectations for unconventional gas. 3
EIA also has reduced its forecasts of the amount of gas that the United States will consume in the future, and nearly all of