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Guest Post: The Absurdity Of US Natural Gas Exports

Tyler Durden's picture




 

Submitted by Gail Tverberg via Our Infinite World blog,

Quiz:

1. How much natural gas is the United States currently extracting?

(a) Barely enough to meet its own needs
(b) Enough to allow lots of exports
(c) Enough to allow a bit of exports
(d) The United States is a natural gas importer

Answer: (d) The United States is a natural gas importer, and has been for many years. The EIA is forecasting that by 2017, we will finally be able to meet our own natural gas needs.

Figure 1. US Natural Gas recent history and forecast, based on EIA's Annual Energy Outlook 2014 Early Release Overview

Figure 1. US Natural Gas recent history and forecast, based on EIA’s Annual Energy Outlook 2014 Early Release Overview

In fact, this last year, with a cold winter, we have had a problem with excessively drawing down amounts in storage.

Figure 2. US EIA's chart showing natural gas in storage, compared to the five year average, from Weekly Natural Gas Storage Report.

Figure 2. US EIA’s chart showing natural gas in storage, compared to the five year average, from Weekly Natural Gas Storage Report.

There is even discussion that at the low level in storage and current rates of production, it may not be possible to fully replace the natural gas in storage before next fall.

2. How much natural gas is the United States talking about exporting?

(a) A tiny amount, less than 5% of what it is currently producing.
(b) About 20% of what it is currently producing.
(c) About 40% of what it is currently producing.
(d) Over 60% of what it is currently producing.

The correct answer is (d) Over 60% what it is currently producing. If we look at the applications for natural gas exports found on the Energy.Gov website, we find that applications for exports total 42 billion cubic feet a day, most of which has already been approved.* This compares to US 2013 natural gas production of 67 billion cubic feet a day. In fact, if companies applying for exports build the facilities in, say, 3 years, and little additional natural gas production is ramped up, we could be left with less than half of current natural gas production for our own use.

*This is my calculation of the sum, equal to 38.51 billion cubic feet a day for Free Trade Association applications (and combined applications), and 3.25 for Non-Free Trade applications.

3. How much are the United States’ own natural gas needs projected to grow by 2030?

a. No growth
b. 12%
c. 50%
d. 150%

If we believe the US Energy Information Administration, US natural gas needs are expected to grow by only 12% between 2013 and 2030 (answer (a)). By 2040, natural gas consumption is expected to be 23% higher than in 2013. This is a little surprising for several reasons. For one, we are talking about scaling back coal use for making electricity, and we use almost as much coal as natural gas. Natural gas is an alternative to coal for this purpose.

Furthermore, the EIA expects US oil production to start dropping by 2020 (Figure 3, below), so logically we might want to use natural gas as a transportation fuel too.

Figure 3. US Annual Energy Outlook 2014 Early Release Oil Forecast for the United States.

Figure 3. US Annual Energy Outlook 2014 Early Release Oil Forecast for the United States.

We currently use more oil than natural gas, so this change could in theory lead to a 100% or more increase in natural gas use.

Many nuclear plants we now have in service will need to be replaced in the next 20 years. If we substitute natural gas in this area as well, it would further send US natural gas usage up. So the EIA’s forecast of US natural gas needs definitely seem on the “light” side.

4. How does natural gas’s production growth fit in with the growth of other US fuels according to the EIA?

(a) Natural gas is the only fuel showing much growth
(b) Renewables grow by a lot more than natural gas
(c) All fuels are growing

The answer is (a). Natural gas is the only fuel showing much growth in production between now and 2040.

Figure 4 below shows the EIA’s figure from its Annual Energy Outlook 2014 Early Release showing expected production of all types of fuels.

Figure 4. Forecast US Energy Production by source, from US EIA's Annual Energy Outlook 2014 Early Release.

Figure 4. Forecast US Energy Production by source, from US EIA’s Annual Energy Outlook 2014 Early Release.

Natural gas is pretty much the only growth area, growing from 31% of total energy production in 2012 to 38% of total US energy production in 2040. Renewables are expected to grow from 11% to 12% of total US energy production (probably because the majority is hydroelectric, and this doesn’t grow much). All of the others fuels, including oil, are expected to shrink as percentages of total energy production between 2012 and 2040.

5. What is the projected path of natural gas prices:

(a) Growing slowly
(b) Ramping up quickly
(c) It depends on who you ask

It depends on who you ask: Answer (c). According to the EIA, natural gas prices are expected to remain quite low. The EIA provides a forecast of natural gas prices for electricity producers, from which we can estimate expected wellhead prices (Figure 5).

Figure 5. EIA Forecast of Natural Gas prices for electricity use from AEO 2014 Advance Release, together with my forecast of corresponding wellhead prices. (2011 and 2012 are actual amounts, not forecasts.)

Figure 5. EIA Forecast of Natural Gas prices for electricity use from AEO 2014 Advance Release, together with my forecast of corresponding wellhead prices. (2011 and 2012 are actual amounts, not forecasts.)

In this forecast, wellhead prices remain below $5.00 until 2028. Electricity companies look at these low price forecasts and assume that they should plan on ramping up electricity production from natural gas.

The catch–and the reason for all of the natural gas exports–is that most shale gas producers cannot produce natural gas at recent price levels. They need much higher price levels in order to make money on natural gas. We see one article after another on this subject: From Oil and Gas Journal; from Bloomberg; from the Financial Times. The Wall Street Journal quoted Exxon’s Rex Tillerson as saying, “We are all losing our shirts today. We’re making no money. It’s all in the red.”

Why all of the natural gas exports, if we don’t have very much natural gas, and the shale gas portion (which is the only portion with much potential for growth) is so unprofitable? The reason for all of the exports is too pump up the prices shale gas producers can get for their gas. This comes partly by engineering higher US prices (by shipping an excessive portion overseas) and partly by trying to take advantage of higher prices in Europe and Japan.

Figure 6. Comparison of natural gas prices based on World Bank "Pink Sheet" data. Also includes Pink Sheet world oil price on similar basis.

Figure 6. Comparison of natural gas prices based on World Bank “Pink Sheet” data. Also includes Pink Sheet world oil price on similar basis.

There are several catches in all of this. Dumping huge amounts of natural gas on world export markets is likely to sink the selling price of natural gas overseas, just as dumping shale gas on US markets sank US natural gas prices here (and misled some people, by making it look as if shale gas production is cheap). The amount of natural gas export capacity that is in the approval process is huge: 42 billion cubic feet per day. The European Union imports only about 30 billion cubic feet a day from all sources. This amount hasn’t increased since 2005, even though EU natural gas production has dropped. Japan’s imports amounted to 12 billion cubic feet of natural gas a day in 2012; China’s amounted to about 4 billion cubic feet. So in theory, if we try hard enough, there might be a place for the 42 billion cubic feet per day of natural gas to go–but it would take a huge amount of effort.

There are other issues involved, as well. The countries that are importing huge amounts of high-priced natural gas are not doing well financially. They aren’t going to be able to afford to import a whole lot more high-priced natural gas. In fact, a big part of the reason that they are not doing well financially is because they are paying so much for imported natural gas (and oil).

If the US has to pay these high prices for natural gas (even if we produce it ourselves), we won’t be doing very well financially either. In particular, companies who manufacture goods with electricity from high-priced natural gas will find that the goods they make are not competitive with goods made with cheaper fuels (coal, nuclear, or hydroelectric) in the world marketplace. This is a problem, whether the country produces the high-priced natural gas itself or imports it. So the issue is not an imported fuel problem; it is a high-priced fuel problem.

Another issue is that with shale gas, we are the high cost producer. There is a lot of natural gas production around the world, particularly in the Middle East, that is cheaper. If we add our high cost of shale gas to the high cost of shipping LNG long-distance across the Atlantic or Pacific, we will most definitely be the high cost producer. Other producers with lower costs (even local shale gas producers) can undercut our prices. So at best those shipping LNG overseas are likely to make mediocre profits.

And there would seem to be great temptation to stir up trouble, to encourage Europe to buy our natural gas exports, rather than Russia’s. Of course, our ability to provide this natural gas is not entirely clear. It makes a good story, with lots of “ifs” involved: “If we can really extract this natural gas. If the price can really go up and stay up. If you can wait long enough.” The story makes the US look more rich and powerful than it really is. We can even pretend to offer help to the Ukraine.

Perhaps the best outcome would be if virtually none of this natural gas export capacity ever gets built–approval or no approval. If it is really possible to get the natural gas out, we need it here instead. Or leave it in the ground.

 

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Tue, 04/01/2014 - 13:10 | 4614138 LawsofPhysics
LawsofPhysics's picture

Optimistic predictions (it's how an eCONomist keeps their "job" until something better comes alone...).

 

And what does their track record look like?

Tue, 04/01/2014 - 13:13 | 4614152 Dollarmedes
Dollarmedes's picture

I'm getting a little tired of the idea that all US production goes toward internal demand first. Production will go toward the market with the highest price; that's called "capitalism." That means no matter how much natgas the US produces, we will probably always import *some*.

Tue, 04/01/2014 - 13:17 | 4614166 Dollarmedes
Dollarmedes's picture

Also, production going towards the highest bidder will result in high profits for the shareholders of energy companies. They will maximize their resources to take advantage of that. But I guess all those retirement funds are supposed to overlook that because *screw them*...amiright?

Tue, 04/01/2014 - 13:21 | 4614176 knukles
knukles's picture

It's all political horseshit.
Fuck the EU

Tue, 04/01/2014 - 13:27 | 4614197 Oh regional Indian
Oh regional Indian's picture

Nothing needs to make sense anymore, all absurd.

Here in India, our gold mines have been shut pretty much since the british left. All flooded, machinery rusted in, tunnels dilapidated. And we import what? How much?

It's all a clown show. I'll save my nuts till a really bad winter comes then I'll starve all of you....

Machine minds running things..

ori

http://aadivaahan.wordpress.com/2010/06/28/the-age-of-machines/

 

Tue, 04/01/2014 - 13:45 | 4614269 0b1knob
0b1knob's picture

This is the LONGEST circular argument I've ever read.

In a closed system where there are no facilities to export a commodity, production is ALWAY going to be about equal to consumption.  How could it be otherwise?

Tue, 04/01/2014 - 13:46 | 4614278 gmrpeabody
gmrpeabody's picture

All of this begs the question…, who owns the natural gas? Is it the land owner with his mineral rights? Do mineral rights go all the way the Earth’s core? Is natural gas like water, where possession is 9/10’s of the law…, some of the time?

 

I always wonder where ownership of a country’s natural resources begins and ends. Though I consider myself to be a little right of Attila the Hun, I can’t help but think that government would be remiss to allow the nations resources to be shipped away to the great benefit of a select few, while the rest of the sheep suffer. Perhaps good debate for a later time.

Tue, 04/01/2014 - 13:54 | 4614312 That Peak Oil Guy
That Peak Oil Guy's picture

It is cool to see Gail on ZH!

Tue, 04/01/2014 - 14:16 | 4614385 SRSrocco
SRSrocco's picture

Of course we'll export some LNG in the future. It would look completely stupid if we didn't use these LNG export facilities after they cost $billions to construct.

Unfortunately, by the time these LNG facilities are built, the shale gas market will need $7.25 mmbtu (Art Berman) to actually produce enough natgas to export some.  However, this higher price makes the LNG export model much less attractive.

What I am waiting for is for someone in the Industry to say... WE ARE GOING TO EXPORT U.S. OIL in the future. That would be even a better stunt as we import a little less than half of what we produce.

Seems to be a lot of BRAIN DAMAGE out there.

Tue, 04/01/2014 - 14:42 | 4614503 idea_hamster
idea_hamster's picture

"So the issue is not an imported fuel problem; it is a high-priced fuel problem."

Next up:  

Oil Sheik-tallow candles! Low-soot! Medium-stink. Conscience friendly.  

(May include up to 5% Dick Cheney heart valve plaque.)

Tue, 04/01/2014 - 17:17 | 4615120 GooseShtepping Moron
GooseShtepping Moron's picture

Yes it is. I miss The Oil Drum. It was a quiet, civil, very informative kind of website of which there are nowhere near enough. Gail's work is excellent and deserves an appreciative audience, and I know some of the folks at Zero Hedge will enjoy it.

Tue, 04/01/2014 - 14:38 | 4614483 CrashisOptimistic
CrashisOptimistic's picture

"This is the LONGEST circular argument I've ever read.

In a closed system where there are no facilities to export a commodity, production is ALWAY going to be about equal to consumption.  How could it be otherwise?"

Except that's not the point. 

In the world of economics demand and consumption are the same thing.  In the world of rational reality, that doesn't have to be so.

So suppose production is less than demand.  That means no growth.

Tue, 04/01/2014 - 13:51 | 4614291 zaphod
zaphod's picture

I'd say that is a smart policy, keep your gold in the ground. Then if/when you really need it you can reopen the mines. 

Those contries that conserve/don't touch their resources, will benefit much more down the line when they become globably scarce. 

Tue, 04/01/2014 - 13:38 | 4614206 Lore
Lore's picture

You nailed it. Our natural gas forecasters are bluffing with a lousy poker hand, because the crime bosses they answer to are psychopaths who could not care less about minor annoyances like 'truth.' They care only about getting their 'way.' They're liars, destroyers and control freaks, pure evil.

Tue, 04/01/2014 - 13:41 | 4614248 Citxmech
Citxmech's picture

Hey!  These charts don't look anything like the ones featured in that shiny invest brochure I got from that gas exploration company. . . 

Tue, 04/01/2014 - 13:48 | 4614284 CrashisOptimistic
CrashisOptimistic's picture

You and the previous guy have ignored shipping and LNG conversion costs.

You can't look at a price here and say, hey the price is higher there so I'll sell it there.  Costs eat it up.

Tue, 04/01/2014 - 13:57 | 4614321 CrazyCooter
CrazyCooter's picture

Correct.

About 30% of the energy in NG is used to cool it to -162 °C (-260 °F) such that it liquifies to LNG. While the energy for this process can come from an external source, it is *energy* not dollars.

Exporting LNG has a huge cost built into it and is usually done when there is no domestic market for traditional delivery (e.g. north slope Alaska and the current effort to build a gas pipeline/LNG facility).

Regards,

Cooter

Tue, 04/01/2014 - 17:31 | 4615158 post turtle saver
post turtle saver's picture

typical LNG trains use 9% of feed gas for LNG production... some of the newer tech has cut that down to as low as 6%... and before you start splitting hairs with me, yes, I mean 6 to 9% on an energy basis...

if it took 30% on an energy basis as you claim, LNG wouldn't be profitable, period end of story

Tue, 04/01/2014 - 14:30 | 4614449 furgheddubouddit
furgheddubouddit's picture

Or in other words: US gas producers feel that the prices they are receiving are too low, so therefore will create an artificial gas shortage, and accompanying price spike, by shipping the stuff offshore.

Just another racketeering scheme.

Forget about history never repeating. Back to the good old Enron days we go.

Tue, 04/01/2014 - 16:15 | 4614868 Renewable Life
Renewable Life's picture

I'm waiting for someone to say, we have a sea of gas and oil to extract right here in the good ol US of A, it's just "not at the right price to do it" next!!!

I also love the fools purporting that commodities operate in a free market capital pricing mechanism on this planet!!!! That has happened since the turn of the 20th century! Ask Putin whats free market about whats going on in Russia right now?? Jesus, people! Exporting energy from the most wasteful, energy dependent, consumption clueless society in the history of the world??? Are you fucking serious??

Not only will we NOT be exporting energy, we will continue to consume 1/3 of the worlds resources with 350 million people on a planet of 8 billion, until the price gets sooooo fucking high, it all crashes in a global heap of globalist shit, which yes at that point, energy might "price" correctly and we might export some.

But don't be silly, 250 million Americans will be getting there heat from wood or moving to a mild climate to survive and the rest will be walking and riding bikes to work( if they are lucky enough to work) but the fucking energy will be being exported in some none USD currency, then!

Tue, 04/01/2014 - 13:18 | 4614168 LawsofPhysics
LawsofPhysics's picture

Please, "capitalism" requires a respect for capital.

This does not exist in a "debt is money"/"bailout nation"...

hedge accordingly...

Tue, 04/01/2014 - 13:25 | 4614192 FeralSerf
FeralSerf's picture

And "respect for capital" requires the generous use of jackboots.

Patience grasshopper, we're getting there.

Tue, 04/01/2014 - 13:39 | 4614239 Mad_max
Mad_max's picture

It require risk. When the jackboots come in then it become socialism/ corporatism/ fascism. Whatever you want to call it. Socialsim works fine for a name for it.

Tue, 04/01/2014 - 17:18 | 4615115 FeralSerf
FeralSerf's picture

Why not call it what it really is, "feudalism"? Corporatism and fascism were/are really just new words for feudalism, the ownership of the proletariat by a few rich "lords".

Socialism is really just a pack of lies told by those feudal lords to their flocks of serfs to convince them that the wolves that are herding those flocks are just there to help them. "We're from the government and we're here to help you."

We have met the mutton and they are us.

Tue, 04/01/2014 - 13:28 | 4614202 Dollarmedes
Dollarmedes's picture

So what you're saying is, the US isn't practicing capitalism.

...and our economy (the real one) is stuck in neutral, at best.

Hmmmm...maybe we should try capitalism?

Tue, 04/01/2014 - 13:40 | 4614243 moneybots
moneybots's picture

"I'm getting a little tired of the idea that all US production goes toward internal demand first. Production will go toward the market with the highest price; that's called "capitalism.""

 

I thought the whole point of drilling, baby, drilling, was supposed to be to make us energy independent, as well as bring down the price, since the economy runs on energy, as well as needs cheap energy.

Tue, 04/01/2014 - 13:51 | 4614294 CrashisOptimistic
CrashisOptimistic's picture

You don't understand what a "boom" is.

You don't have to grow oil output to have a boom.  You don't have to grow gas output to have a boom.

All you have to do is have jobs numbers grow.  If NDak declines to 600K bpd and holds that number for 5 years, requiring more and more workers to hold it there, it will be called a boom.

Tue, 04/01/2014 - 16:22 | 4614910 slightlyskeptical
slightlyskeptical's picture

Forsaking your fellow countrymen so that you can make additional profits is nothing less than treason in my eyes. No different than a spy selling country secrets.

 

Tue, 04/01/2014 - 13:19 | 4614170 El Vaquero
El Vaquero's picture

 

And what does their track record look like?

Shit?

Tue, 04/01/2014 - 14:40 | 4614496 JeffB
JeffB's picture

I don't quite understand how this all fits together.

She's saying we already have tight supply, and demand is rising and has been, but the price is so low that the producers have been "losing our shirts" for quite some time, such that they need to export vast amounts to raise the prices to where they can be profitable.

Is there some other external factor I don't remember seeing in the article that is artificially suppressing the price? If not, why wouldn't the normal "invisible hand" of the free market work to fix those imbalances? Wouldn't a supply that is too low and unable to keep up with rising demand automatically lead to higher prices? If marginal costs are below marginal revenues wouldn't the producers have cut back on production before now?

I'm sure there are other factors involved, but the pieces still don't seem to quite all fit together in a logically cohesive whole for me at the moment.

 

Tue, 04/01/2014 - 17:39 | 4615180 GooseShtepping Moron
GooseShtepping Moron's picture

Hi Jeff,

What you're noticing here is the "energy trap" that Peak Oil writers like Gail have been warning about. She has explained it in great detail in several of her articles which are archived at The Oil Drum if you would like to delve into it. I think you'll find it time well spent.

In basic terms, it has to do with the cost of a commodity in dollars vs. its cost in energy. When it takes about as much energy to extract a cubic foot of gas from the ground as you would get from burning the gas, then its cost in dollars is too low to justify extraction. The energy company cannot make a profit because it spends as much on energy as the value of the energy it delivers, and this despite the fact that supplies are tight. It means that there really is no more gas to be produced at the current price level, so production declines, raising prices further. The dollar has to coordinate the price of all goods and services across the entire economy, which means that shortages are additive and price increases in key comodities are distributed throughout the whole system. In order to continue producing gas under those circumstances, production would have to be subsidized, which weakens the economy still further. The net result is a dilemma: Whether we produce more gas or less gas, the economy shrinks either way. In effect, we have reached the limits to growth.

This is what Peak Energy looks like as its effects ripple through the economy. This is how it "plays out."

Tue, 04/01/2014 - 18:03 | 4615246 JeffB
JeffB's picture

Thanks for the reply, GSM.

It's been awhile since I've been to the Oil Drum, but I do remember reading about the Energy Return on Energy Invested phenomenon there. I do think that the energy crisis they warn of is very real and could potentially be catastrophic for the world.

But the EROI doesn't seem to me as if it fully explains the apparent discrepancy I described.

For one, if that is what is going on, I would have expected her to mention it in this article.

It also seems to me that if it was costing them more, either in energy or in dollars to extract it than what they could get in return they would have quit drilling for it by now... and probably sooner. Why would they continue to keep drilling while "losing our shirts"?

And if there is a shortage, why hasn't the price gone up? Why are companies still substituting natural gas for coal, and why the demand for more natural gas vehicles, and more companies installing natural gas refueling stations around the country? It's still a rather small phenomenon, but if there was a shortage I would think prices should have already responded to ration the available supply to those willing to pay more for it.

 

Tue, 04/01/2014 - 20:34 | 4615636 FeralSerf
FeralSerf's picture

Why don't the drillers use some of that almost free energy that's available in the flared gas?

Bottom line: we're being lied to concerning the true value of NG energy. If the drillers can afford to throw it away to get to the NGL, it must not be worth much.

Wed, 04/02/2014 - 10:03 | 4617093 JeffB
JeffB's picture

As I understand it that gas is landlocked. There are no pipelines or other infrastructure there to get it to market.

They could ship it via truck, but the cost to do so is greater than the market value once it gets there.

 

Wed, 04/02/2014 - 13:15 | 4617782 FeralSerf
FeralSerf's picture

They could generate electricity with it on-site using portable generator sets.

Wed, 04/02/2014 - 14:26 | 4618093 yt75
yt75's picture

I think they do with some of it.

But the key point is : if the liquids extracted make the business profitable, then it makes the business profitable, and if you start it without any way to get the gas out, you flare it, but your business is still profitable.

 

And building ways to get the gas out would require more investment, that you migth not wish to do (or even not profitable at all, if too long distance too little volume for instance).

Wed, 04/02/2014 - 14:21 | 4618079 yt75
yt75's picture

The price is going up quite strongly :

http://www.eia.gov/dnav/ng/hist/rngwhhdm.htm

Tue, 04/01/2014 - 13:10 | 4614141 Haus-Targaryen
Haus-Targaryen's picture

So Russland really could screw with Europe, and no secret transatlantic pipe would do a thing. 

Good to know. 

Wed, 04/02/2014 - 14:19 | 4618072 yt75
yt75's picture

The game here is more Qatar wanting its pipeline through Syria to feed Euope much more directly than through LNG and ships.

 

From the US part it's pure propaganda (or hysterical one)

Tue, 04/01/2014 - 13:13 | 4614143 Gunga
Gunga's picture

 The Crown exported agriculture products from Ireland during the Great Potato Famine also.  If the people have nothing those that control the natural resources will export to those that can pay the highest price.

 

Tue, 04/01/2014 - 13:22 | 4614178 CrashisOptimistic
CrashisOptimistic's picture

I know that's the popular opinion, but I don't see how that worked in the age before refrigeration.  Where could food be shipped fast enough not to spoil enroute?

Tue, 04/01/2014 - 13:27 | 4614196 FeralSerf
FeralSerf's picture

Grain products don't (and didn't) require refrigeration. (Duh)

Tue, 04/01/2014 - 13:34 | 4614218 CrashisOptimistic
CrashisOptimistic's picture

Okay that works, I thought the issue was scarce potatoes being shipped.

Tue, 04/01/2014 - 13:50 | 4614290 FeralSerf
FeralSerf's picture

Potatoes weren't being exported during the Great Famine in Ireland, grain was.

"Although the potato crop failed, the country was still producing and exporting more than enough grain crops to feed the population. Records show during the period Ireland was exporting approximately thirty to fifty shiploads per day of food produce. As a consequence of these exports and a number of other factors such as land acquisition, absentee landlords and the effect of the 1690 penal laws, the Great Famine today is viewed by a number of historical academics as a form of either direct or indirect genocide."

https://en.wikipedia.org/wiki/Great_Famine_(Ireland)

Tue, 04/01/2014 - 13:35 | 4614221 Totentänzerlied
Totentänzerlied's picture

Potatos (and other tubers), roots, and (dried) grains* keep rather well, for weeks if not months. Shipping to Europe would take a matter of days.

* though I don't believe Ireland (or any part of the Isles except maybe Wales) was ever a major grain producer

Tue, 04/01/2014 - 14:36 | 4614475 FeralSerf
FeralSerf's picture

"Throughout the entire period of the Famine, Ireland was exporting enormous quantities of food to England. In Ireland before and after the famine, Cormac O'Grada points out, "Although the potato crop failed, the country was still producing and exporting more than enough grain crops to feed the population. But that was a 'money crop' and not a 'food crop and could not be interfered with." Up to 75 percent of Irish soil was devoted to wheat, oats, barley and other crops that were grown for export and shipped abroad while the people starved."

https://en.wikipedia.org/wiki/Great_Famine_(Ireland)

Tue, 04/01/2014 - 13:11 | 4614146 RagnarDanneskjold
RagnarDanneskjold's picture

Keep the gas in the United States to lower natural gas prices. This will give the U.S. a competitive advantage in energy costs, which will cause companies that use natural gas as a raw material to relocate to the United States. Instead of exporting cheap natural gas, it can export value added products, while growing the domestic economy.

Tue, 04/01/2014 - 13:16 | 4614160 samsara
samsara's picture

"... Instead of exporting cheap natural gas..."

Did you read the article at all?

Tue, 04/01/2014 - 13:22 | 4614180 Dollarmedes
Dollarmedes's picture

It will also result in a government-captured energy sector full of cronyism, like Venezuela. Production will increase even if it doesn't make economic sense because lower energy prices buy votes. In order to ensure the loyalty of the companies, they will either be stocked with toadies or will be nationalized outright. When political loyalty trumps industrial competence, the system will slowly degrade until it falls apart.

 

But other than that, it's a great idea.

Wed, 04/02/2014 - 06:24 | 4616488 tonyw
tonyw's picture

Perhaps the countries that are exporting their oil and gas (and any other products??) to the United States should consider doing the same?

 

Tue, 04/01/2014 - 13:14 | 4614155 samsara
samsara's picture

Tylers,  Great to see you post another great one by Gail.

Thanks. 

Tue, 04/01/2014 - 13:17 | 4614165 fonzannoon
fonzannoon's picture

I never thought i'd say this but I hope everyone is watching cnbc right now

Tue, 04/01/2014 - 13:54 | 4614311 Zadok
Zadok's picture

Hey Fonz, I always appreciate your comments. I gave up the tube more than a decade ago and couldnt be more pleased. I try to keep up with the pulse...do tell, please.

Tue, 04/01/2014 - 13:56 | 4614317 fonzannoon
fonzannoon's picture

Give it a few mins. ZH is already on it with the Bats thread. I am sure they will put the full interview up that I was referring to soon.

Tue, 04/01/2014 - 16:10 | 4614844 Zadok
Zadok's picture

Wow. Exposing of immoral motives is a painful if entertaining process.

There must be a new game afoot if HFT is being let out of the bag...so glad the FBI is on it in such a useful and timely fashion. I'm sure we'll all see our rightful restitution... Insert obligatory sarc off tag here.

Tue, 04/01/2014 - 13:18 | 4614169 Catullus
Catullus's picture

Importing... From Canada.

This article is garbage.

Tue, 04/01/2014 - 13:32 | 4614211 CrashisOptimistic
CrashisOptimistic's picture

What's ugly about importing from Canada?  Their production is falling, btw, so less of that is happening.

Tue, 04/01/2014 - 13:35 | 4614222 FeralSerf
FeralSerf's picture

Production is a pipeline problem, not a natural resource problem.  There's a lot of untapped gas above the Arctic Circle.

Tue, 04/01/2014 - 13:46 | 4614277 Mr Giggles
Mr Giggles's picture

But will the capital be available to extract it?

Tue, 04/01/2014 - 13:59 | 4614323 FeralSerf
FeralSerf's picture

It will if gas prices rise enough.  There are natives in the way of the pipeline as well, but we can count on BP's expertise in solving that problem.

Tue, 04/01/2014 - 15:26 | 4614666 Matt
Matt's picture

British Columbia is moving to allow resource extraction and pipelines inside of Provincial Parks.

Tue, 04/01/2014 - 13:33 | 4614214 FeralSerf
FeralSerf's picture

The author does not know that Canada is an Anglo-American colony.

Tue, 04/01/2014 - 18:08 | 4615255 TuPhat
TuPhat's picture

I agree the article is garbage.  There is already an LNG shipping facility in the US.  It's about 40 miles from my house on the gulf.  It is not being used at the present time becasue it is not economical to do so.  The article talks about applications and permits that don't mean a thing.  If there is profit in it, it will be done.  Otherwise, not any time soon.

Tue, 04/01/2014 - 13:20 | 4614172 TheRideNeverEnds
TheRideNeverEnds's picture

B..but the tee vee told me we have enough gas for the next 10,000 years so we need to sell it offshore to the highest bidder, you know, for 'merrica!  You are not saying they would lie to me are you?

Tue, 04/01/2014 - 13:24 | 4614183 Itchy and Scratchy
Itchy and Scratchy's picture

You missed all the 'butt gaz' produced in Washington!

Tue, 04/01/2014 - 13:24 | 4614186 Mr Giggles
Mr Giggles's picture

Those figures projected to future dates, look a little rosey to me. I am no expert but I dont think 2038 looks like that at all. Live and learn spose.

Tue, 04/01/2014 - 13:54 | 4614295 TrumpXVI
TrumpXVI's picture

They are rosy, Gail uses EIA numbers and I believe she does this slightly tongue-in-cheek.  I've been reading Gail for years and she is distinctly more pessimistic than one might think from a casual reading of her post here today.

Tue, 04/01/2014 - 13:29 | 4614205 CrazyCooter
CrazyCooter's picture

I really enjoy reading Gail's posts andI hope the Tylers continue to republish her writings here. Energy drives the economy and it is very relavent!

Regards,

Cooter

Tue, 04/01/2014 - 13:32 | 4614213 Cornholiovanderbilt
Cornholiovanderbilt's picture

North Dakota flares more gas in 24 hours than all 50 states produce. This article is crap!

Tue, 04/01/2014 - 13:37 | 4614230 CrashisOptimistic
CrashisOptimistic's picture

It's flared because there is no possible way to get pipes laid to each well (200 new wells a month) and flowing before the well dies.

IOW, there's nowhere else for the gas to go.

Tue, 04/01/2014 - 14:21 | 4614408 TrumpXVI
TrumpXVI's picture

Yup, flared because it's landlocked.  Landlocked supply doesn't count if there's no way to get it to market.

The most interesting supply of "landlocked" natgas is under the Persian Gulf; not anywhere in North America.

Tue, 04/01/2014 - 17:25 | 4615138 FeralSerf
FeralSerf's picture

Why can't the flared gas be used to generate electricity for local consumption?

Tue, 04/01/2014 - 13:43 | 4614261 eddiebe
eddiebe's picture

Do you know this for a fact?

Tue, 04/01/2014 - 13:49 | 4614288 magnetosphere
Tue, 04/01/2014 - 14:57 | 4614562 Cornholiovanderbilt
Cornholiovanderbilt's picture

Add at least one zero to any eia stat ;)

Tue, 04/01/2014 - 13:53 | 4614303 Cornholiovanderbilt
Cornholiovanderbilt's picture

Nothing is a fact anymore. I've heard that stat directly from the gov of n Dakota, Harold Hamm and a navigant director. Its a pressure and infrastructure prob but we are awash in gas

Tue, 04/01/2014 - 13:55 | 4614314 CrashisOptimistic
CrashisOptimistic's picture

Pretty much.  The same effect plays with oil. 

There are few pipelines.  It's all trucks.  There is a statistic floating around I saw on POB, it takes 2000 truck trips to drill, frack and haul first year oil for a single well.

Wed, 04/02/2014 - 09:42 | 4616998 Flakmeister
Flakmeister's picture

Dead thread but I can't pass up on pointing out that this is complete and utter bullshit...

Tue, 04/01/2014 - 13:33 | 4614215 Philalethian
Philalethian's picture

We turned off our radioactive propane gas heater and used the wood stove for the last three months. Besides the high radiation readings in the blowing heater, the costs are prohibitive any more.

The savings are significant as we have moved a little closer to being self-sufficient after the crash/false flag/martial law happens. We prolly will not take another gas delivery until later this next winter IF it's even available then. We only need the gas for the water heater and the usage of hot water is being decreased significantly also. If the tank is still at 80% full come winter, we may not take a delivery then. Using the wood stove takes more work, but the radiation free heat and free supply of wood more than makes up for the higher and higher costs of the irradiated propane gas.

https://en.wikipedia.org/wiki/Project_Gasbuggy

Tue, 04/01/2014 - 14:28 | 4614441 Ckierst1
Ckierst1's picture

I give up!  Who is going around irradiating propane?  This is not normally part of the natural gas processing circuit as I understand it.  Is this a serious problem?  I mean everything has a background radioactive value at some level.  Are we becoming a bit hysterical, hmmmm?

Tue, 04/01/2014 - 13:33 | 4614217 Itchy and Scratchy
Itchy and Scratchy's picture

New Prez H. Clinton promises all the methane rear gaz that will be needed!

Tue, 04/01/2014 - 13:40 | 4614228 Omen IV
Omen IV's picture

my understanding is the cost to compress and decompress the liquid gas and transport is at least $6 mmcf - so if you assume a high winter number at the wellhead of $7 mmcf  - the breakeven is $13 mmcf in rotterdam minimum - if you assume $2 mmcf at the wellhead you are $8 mmcf landed - and the russians can beat you by at least $1.00 mmcf if they want to

in 2007 NG was $11 mmcf at the wellhead in many places in the NW - so if you assume tight supply in USA or contrived price to bolster drilling - you are now at $17 mmcf in europe breakeven with russians being the swing pricing player  - always undercutting with cheaper production - so how do you sell that number?

why would anyone take the chance on LNG facility in the billions unless US government guaranteeing the debt?

compression costs BTU's maybe some new magic technology can lower the cost

what dont i understand?

Tue, 04/01/2014 - 13:40 | 4614245 CrashisOptimistic
CrashisOptimistic's picture

Gas isn't paying the bills at the wellhead.  Those wells flow NGLs and even a little oil, too.  The gas is extra and it doesn't pay much.

The subtle thing about LNG is storage loss.  After you pay the money to compress and freeze, then you store it, and even well insulated it starts to heat up.  The number I've seen is 1% loss per day, so wherever you're shipping it you have to get it there fast.

Tue, 04/01/2014 - 13:43 | 4614259 pitz
pitz's picture

Yeah don't underestimate the energy cost of the liquefaction process.  Much better, if there is actually a surplus, to turn it into petrochemicals domestically, rather than export it wastefully and cheaply.   Gas to oil projects are also grossly innefficient. 

Tue, 04/01/2014 - 17:29 | 4615151 FeralSerf
FeralSerf's picture

If gas that's being flared/thrown-away is used for liquefaction energy, there isn't much real energy cost besides the capital equipment depreciation expense.

Wed, 04/02/2014 - 00:32 | 4616185 pitz
pitz's picture

The wells could just be shut-in.  I mean, its not like the oil and gas is going anywhere if its not produced

Tue, 04/01/2014 - 13:38 | 4614237 orangegeek
orangegeek's picture

Interesting - natgas fell 5% last month - and recently blew off.

 

http://bullandbearmash.com/chart/monthly-natural-gas-heads-5-downside-ch...

 

Natgas overseas seems more expensive - good place to export. 

 

US imports (it doesn't state) are likely Canadian - so Canada appears to be selling to lower price US than to export themselves.

Tue, 04/01/2014 - 13:42 | 4614255 CrashisOptimistic
CrashisOptimistic's picture

The ENI CEO recently offered the price breakdown.

The US could not get nat gas to europe and land it for a price under $9.  That is what LNG freezing/compressing and shipping costs.

Russia can land gas into Europe at $6.  So who is going to finance an LNG plant when they know their competitor in Europe can crush them?

Tue, 04/01/2014 - 13:40 | 4614240 Inspector Bird
Inspector Bird's picture

Our needs don't singularly or strictly dictate whether we import or export.  There is always a level of both which will, could, or should take place.  Prices will determine what makes sense.

If, as a producer here in the US, I can sell my NatGas to India for $1.00/cf, but only get .91/cf here in the US, I'll export.

At the same time, if Russia has a contract with another firm for .90/cf to import, they will potentially be importing.

A third producer with lower costs than me may find his negotiations with US suppliers vs. India are better than mine, and keep selling domestically because he's a better businessman domestically.

Prices will always dictate what happens, even if we could, theoretically, meet all our needs, we may well be importing if the needs elsewhere are greater and we have a strong negotiating position with external producers.

The only way a discussion about what we need, can produce, should import/export would make sense would be if every nation cut equal deals at a top-line level, which I suspect they don't, since the market varies significantly over both time and producer/importer.  However, as another commenter pointed out, when there is a singular negotiation taking place, the needs of a nation are not met properly (Venezuela) as prices are skewed toward expectations, rather than real need.  And needs rarely match expectations.

Tue, 04/01/2014 - 13:44 | 4614263 CrashisOptimistic
CrashisOptimistic's picture

You have ignored all costs of LNG freezing/compressing and shipping.  You can't see a price at point B and think you'll get all of the difference between point A and point B.

Tue, 04/01/2014 - 14:03 | 4614337 Catullus
Catullus's picture

You're ignoring how capacity at the LNG hubs are going to get priced. They've been contracting for the capacity already and yet they're still going through with the projects. Yes. Their finance people are aware.

Tue, 04/01/2014 - 14:36 | 4614473 pitz
pitz's picture

And the so-called "finance people" have never engaged in mal-investment?  Ever?  We're on what, our 2nd or 3rd tech bubble, 2nd housing bubble in a decade, and you put faith in them to make proper decisions?  lol

Tue, 04/01/2014 - 13:40 | 4614244 No Euros please...
No Euros please we're British's picture

No, this can't be true! Obama promised all the gas to the EU and China if they ditched Russian gas, and on top of all the gas he promised India last year if it stopped gold imports. Maybe you guys aren't aware that Obama is one big fracker.

Tue, 04/01/2014 - 13:40 | 4614246 Joe Tierney
Joe Tierney's picture

The whole problem would be solved very simply -

1. Stick Al Gore in a small room

2. Feed him a diet of beans and beer

3. Connect anal and oral methane collectors

4. Pump it to Europe

Tue, 04/01/2014 - 13:40 | 4614247 pitz
pitz's picture

I get a good laugh out of those who claim that the US is rapidly on its way to energy independance, merely on the strength of a few shale oil fields.  Have they actually looked at the numbers? 

 

Tue, 04/01/2014 - 13:42 | 4614256 SmittyinLA
SmittyinLA's picture

They didn't even touch population growth or immigration which will tap and obliterate any increases in production. 

 

1 person = 12 barrels oil per year (or nat gas equivalent)

1 million immigrants require an additional 12 million barrels production EVERY YEAR.

Every year our govt adds 2-5 million more immigrants every year or 24-60 million barrels of annual production demand every year forever

 

Tue, 04/01/2014 - 13:45 | 4614271 pitz
pitz's picture

I'd suggest that some of the more recent immigrants are even worse than that energy-consumption-wise, as they insist on a trip every year back to their homelands.  Roundtrip to India or China from most of America, easily 12 barrels of oil equivalent once all is said and done per person.  The H-1B types, even worse. 

Tue, 04/01/2014 - 13:46 | 4614274 CrashisOptimistic
CrashisOptimistic's picture

Add in some non zero GDP growth.  Even if you get a 20% increase in furnace efficiency, but you add another furnace, you don't decrease consumption.

Tue, 04/01/2014 - 13:49 | 4614286 pitz
pitz's picture

Ironically all these extra immigrants increase labour slack, and force many Americans into wasteful habits.  Like long commutes (because housing prices have been driven up closer city centres).  And poor labour mobility. 

Tue, 04/01/2014 - 13:48 | 4614282 luckylongshot
luckylongshot's picture

If we could somehow hook up lying politicians to a natural gas collection device the US would be self sufficient tomorrow

Tue, 04/01/2014 - 13:48 | 4614285 adr
adr's picture

Basically if you're a working stiff you're fucked.

The time of the US working for its citizens is over. You've been sacrificed at the altar of the moneychanger. They must have thier blood.

Tue, 04/01/2014 - 13:54 | 4614309 Ckierst1
Ckierst1's picture

My guess is that EIA is just reporting shit to justify policy - moar propaganda, moar statistical weaponry.  They erected this federal agency (EIA) to provide the same reporting as generally generated by the independent industrial org, API. The difference is that they wanted to control the flow of (dis?)information and the media stood up and saluted their BS.

Wed, 04/02/2014 - 14:09 | 4617932 yt75
yt75's picture

No.

Of course projection data can be discussed.

But production data from the EIA is I think of very high quality, and honest.

Somehow a remnant of the time when the US were still driven for a major part by science and reason.

Clearly disapearing now, more or less.

 

Tue, 04/01/2014 - 13:56 | 4614316 Cornholiovanderbilt
Cornholiovanderbilt's picture

Quickest way to lose $$ in oil and gas is to rely on eia 'forecasts'

Tue, 04/01/2014 - 13:59 | 4614331 Mr Giggles
Mr Giggles's picture

My guess, the energy companys slowly move to long term agreements for comodities or currency leaving the markets behind. no matter how strong the USD.

Tue, 04/01/2014 - 14:13 | 4614342 Okienomics
Okienomics's picture

Long UNL. I've been tracking NG storage for many years. I'm projecting we go into next winter with uncomfortably little gas in storage. I've been warning clients to fill short positions at today's reasonably low NG forwards. If you read commentaries on Seeking Alpha you'll see lots of "plenty of gas - stay short" recommendations. We shall see.

Tue, 04/01/2014 - 14:17 | 4614391 Okienomics
Okienomics's picture

For those playing at home, avoid UNG.

Tue, 04/01/2014 - 14:14 | 4614375 KingTut
KingTut's picture

Some commenters have hit on the issue here.  PRICE.  The international price of NG is MUCH higher than it is here. Turkey has paid over $20 for what costs $4.5 here.  Once exporting causes the US price of NG to approach international levels, the drillers will go crazy and we will have a huge surplus.  It won't last forever, but the basic thesis of this article is based on current production levels due to an absrudly low price.

Not too long ago NG was LESS than $2.00/mcf, the enrgy equivalent of 9.6 gallons of gasoline which costs $27.00.

BTW: I would prefer we convert our trucking fleets to NG rather than export it.  At a price of $10.00 shale production will kick back into gear creating pelnty of NG for truck fuel. Converting ALL our trucking to NG would increase our consumption by 50%, requiring about 10Tcf of NG in addition to the 20Tcf we use now.

AND at $10.00/mcf it is still less than HALF the cost of diesel fuel.

 

Tue, 04/01/2014 - 14:30 | 4614448 Okienomics
Okienomics's picture

It was under $2 for what, two days in early 2012? Hardly a benchmark. There has been quite a bit of institutional fleet switching to NG (e.g., Dallas city buses all switching to CNG). But the big demand surge has been in the utility sector as NG beat coal. Now that we're holding over $4/dth, NG demand from utilities might soften, but for Obama's war on coal. If we were to have extremely high transportation fleet switching to NG, combined with retirement of coal units, NG would be back to $7s in short order. That would damage a whole lot of industries as it would drive both gas and electricity prices up sharply. I've said before, cheap gas has been the most important source of US economic strength over the last several years (such as it is), and it will be the largest source of inflation if price action keeps moving up.

Tue, 04/01/2014 - 14:15 | 4614381 post turtle saver
post turtle saver's picture

this whole article and the premises behind it are simply dumb... just because you're importing something doesn't mean that you're using it for your own consumption... feedstocks come to the US because the US can refine them, plain and simple... the US exports gasoline and diesel, for example...

these feedstocks are fungible... they can come from anywhere and they can go anywhere...

Tue, 04/01/2014 - 14:26 | 4614433 UrbanBard
UrbanBard's picture

From what I understand, all that is being proposed is getting rid of a stupid law. Shale oil and gas was not even a pipe dream when that law was enacted. It was targeted at Prudhoe Bay. It would have been cheaper to sell that oil to Japan and use the money to transport Saudi oil to the east coast. There is far less transportation cost than going through the Panama canal. And a trans-Canadian pipeline from Prudhoe Bay to the Great lakes had been scotched in the 1970's.

Let the market regulate matters. If the US does not really have enough gas to export, then nothing will happen. What will happen is that the gas suppliers will charge the world price, because they will be allowed to export if they find sources much larger than expected. Or if they find better techniques for chasing out the gas.

We have no idea how much Oil and Gas there is to be found in America, because the US Department of Interior will not allow exploitation of federally controlled lands. Well over a third of the nation is off limits to exploration. If I were a conspiratorial sort, it would sound as though the Obama administration does not want the US economy to recover.

Tue, 04/01/2014 - 14:50 | 4614537 CrashisOptimistic
CrashisOptimistic's picture

1) How does America benefit from having consumers pay more for gas?  Not the gas industry, America.

2) If seismic imaging said there was a Ghawar under federal lands, they would be drilled.  Occam's Razor says the more likely answer is there's nothing there.

3) California has refineries and ports.  And the trans alaskan pipeline, so no idea why you are thinking about Alaska oil going through the canal.

Tue, 04/01/2014 - 14:47 | 4614524 malek
malek's picture

 The United States is a natural gas importer

That statement should be given with some more detail and/or qualifiers, as otherwise it looks like the author is pushing an agenda of his own.

From my very rough understanding, that could only be Canada exporting to us, as there exist no large-scale LNG terminals to recieve it from far away countries.
As Canada has the same issue limiting its choices who to export to, this relativizes the original statement quite a bit.

Tue, 04/01/2014 - 14:51 | 4614544 CrashisOptimistic
CrashisOptimistic's picture

The point is not Canada.  The point is talking about exports when you are an importer.

Wed, 04/02/2014 - 14:12 | 4617908 yt75
yt75's picture

Yes, it is from Canada : you are a small net exporter to Mexico, much bigger net importer from Canada (both through gas pipelines of course).

 

Just go check the data ! :

 

http://www.eia.gov/naturalgas/data.cfm#imports

 

(besides the fact that Gail clearly states her sources)

 

What is truly amazing these days :

- access to data has never been easier

- the propaganda is getting stronger and stronger every day, and it works ...

 

Tue, 04/01/2014 - 15:02 | 4614577 Augustus
Augustus's picture

If the country should not let energy be exported, why is the export of food allowed?  Want to have lower cost airfare, prevent the export of Boeing planes.  All nonsense of course.  As would be a restriction on gas exports.  Coal has been exported for many years. 

The gas being exported essentially results from development of privately owned mineral rights.  The ownership of the minerals goes with ownership of the land, except that someone can seperate that ownership.  The government has ample and vast energy resources that it will not allow to be developed.  We would have an employment and manufacturing boom if the government would allow it.  If it is the government's gas, hence the "people's" gas, being developed,, shouldn't it be sold for the best price?  Sales are not restriced to any limited few.  I am able to buy it in adequate quantities at fair prices.

Tue, 04/01/2014 - 15:12 | 4614618 franciscopendergrass
franciscopendergrass's picture

I'm waiting for the oil and coal industry to create some sort of sabotage of a nat gas plant and kill a bunch of people.  Then they will say that nat gas is not safe.

Tue, 04/01/2014 - 15:28 | 4614677 dukat
dukat's picture

All this data, and not one mention of proved reserves: http://www.eia.gov/countries/country-data.cfm?fips=US&trk=r#ng

334 Tcf as of a dated 2012 number may incent necessary investment in upstream and midstream infrastructure that will enable the US to produce enough to export and keep prices down.

Tue, 04/01/2014 - 20:49 | 4615682 DR
DR's picture

That chart shows world reserves at 6,708. Looks like there will be lots of gas to be exported from other countries without the US petrodollar conditions attached....

 

The US wants to export for geopolitical reasons, not so much for pure arbitrage.

 

 

Wed, 04/02/2014 - 10:26 | 4617192 dukat
dukat's picture

Agreed, the US sure would benefit politically from eating Russia's lunch in Europe. Cheniere already has contracts to export LNG to France's Total and the UK's Centrica. 

The arbitrage opportunity is still there though. Just depends on the extent to which the gubmint allows it to be capitalized on.

Tue, 04/01/2014 - 15:29 | 4614681 mcgoverntm
mcgoverntm's picture

Re: "The Absurdity Of US Natural Gas Exports"

1.  If it's absurd to export US natural gas, why are the people who are doing it doing it?

2.  Do they have a legal right to export the gas?  If so, do they have a right to use their own (possibly absurd) judgment about exporting it?

3.  Cui bono?

4.  What about the old chestnut that free trade benefits everyone who participates?

5.  Did the author, Gail Tverberg, interview the exporters of US natural gas to understand their supposedly "absurd" behavior?  There is nothing in the essay to suggest that she did.

 6.  Could it be that the author, Gail Tverberg, shows absurd values and judgment in writing this article?

 

Tue, 04/01/2014 - 15:29 | 4614684 mcgoverntm
mcgoverntm's picture

7.  Why is ZH publishing this garbage?

Tue, 04/01/2014 - 20:50 | 4615684 DR
DR's picture

Don't tell me you honestly believe that energy commodities are traded in a "free market"

Wed, 04/02/2014 - 13:11 | 4617774 yt75
yt75's picture

They simply have some to export, did you read the article ?

You don't have any to export, still a net importer, and you will NEVER be a major net exporter.

Full stop.

But being able to look at factual data can help.

Tue, 04/01/2014 - 15:35 | 4614716 Area Man
Area Man's picture

Trying to ban exports ? Suddenly out-of love with the free market ?

 

Where in your constitution do they mention "right to mega-cheap gas" ?

 

Zerohedge is getting more of a political blog and less of a market/economics .. pitty..

 

Wed, 04/02/2014 - 13:09 | 4617767 yt75
yt75's picture

What you don't understand is that the volume will not be there for export (in any sizable volume).

All of this is propaganda tricks on geopolitic scene.

(and on the financial scene)

 

Clearly the US is getting out of the rational realm quick, these days ...

Tue, 04/01/2014 - 15:48 | 4614774 Oilwatcher
Oilwatcher's picture

Sorry, anyone who thinks having a freer global market in a physical commodity is a bad thing is full of it (or works for a company currently profiting from artificially depressed US gas prices).  US natural gas production has the capacity to expand dramatically to meet all domestic needs plus provide for plenty of exports.  Today that gas is simply sitting in the ground undrilled, because US demand (while growing fast) doesn't need anything close to what could ultimately be produced.  So instead we're shipping our much-dirtier coal to Germany for them to burn.  And not every Tom, Dick, and Harry who has applied for an export permit will end up building a terminal.  If Obama simply gets out of the way, the terminals that make sense will get built and the ones that don't won't.

The natural gas boom in the U.S. is a rare instance of free market economics in the private sector actually being allowed to work, only because the enviros and others didn't notice what was happening under private land until the boom was well under way.  Don't let government choke it off now.

Wed, 04/02/2014 - 14:10 | 4617756 yt75
yt75's picture

"US natural gas production has the capacity to expand dramatically to meet all domestic needs plus provide for plenty of exports."

 

No it doesn't , AT ALL.

Guess you didn't read the article ?

 

The message is just one of current US propaganda tricks regarding geopolitics (and the financial world) in the big game.

 

 

Tue, 04/01/2014 - 17:11 | 4615100 studfinder
studfinder's picture

Lots of insulation and a wood stove.   A bicycle and good walking shoes.  Hand tools and dirty magazines...   Reduce (or change) your needs before someone else reduces them for you.

Tue, 04/01/2014 - 17:44 | 4615171 earleflorida
earleflorida's picture

The Exporting of NatGas via ReGasification is the the new 'BlueGold Piplineistan' with South Korea leading the way?        The #1 China and #2 S. Korea largest shipbuilders at present... with S. Korea the ReGasification GIANT!     http://en.wikipedia.org/wiki/Shipbuilding#Present_day_shipbuilding        "What is LNG-- Liquified Natural Gas"       http://geology.com/articles/lng-liquefied-natural-gas/    

Note: It takes a cooling treatment of minus 260* F -- plus, treatment process to rid natgas of impurities, while compressing/ converting 610 cf of NatGas into 1cf of LNG. Amazing. Sure refrigeration is expensive some would say, but... from port to port in the seas fast shipping lanes/ routes today, isn't a serious cost factor. [jmo]

Shale Gas USSA is, aOK... but regulation and infrastructure hurdles leaves it in the Louisiana delta`swamps reaching the Gulf of Oklahoma's, 'no-man's-land' furthest from east nor west Texicana imp/exp?   http://ir.eia.gov/ngs/ngs.html       (storage report 2013)    http://en.wikipedia.org/wiki/LNG

Lastly, and very important is water. China will be doing its 'shale gas' thingy shortly but water is a serious problem already with the aquifiers already nearing pollution?  The average farmer in agricultural provinces has to go down several hundred meters today for water. Sometimes, nearly twice and triple the depth in pristine provinces yet unexplained?  There is a problem and the government must decide whether or not they must stick to importing NatGas and save their invaluable land. This is already a problem in the USSA... but, the USSA does have diligent environmentalist keeping land management in check.

Ps.  Shale gas in the USSA is aOK... but, as I've said previously-- all the controversies throughout  the Dept.of the Interior/ Land Management is an easy bureaucracy to corrupt, as we've seen with the toxic waste and the gulf oil spill, etc., etc.!?!

thankyou Tyler (* sorry if I might have gotten off subject)   

Tue, 04/01/2014 - 19:11 | 4615377 bshirley1968
bshirley1968's picture

IF......a countries resources are the true backer of the currenecy of a country (As is the case around the world right now.  The reason we are the reserve currency is because more countries and their resources are willing to take dollars for their resources.)  Why would it be the goal to deport our greatest assets for cheap worthless Fed Reserve dollars?

If we needed to sell that resource, like say Iran, because that is all we had to offer, then I can see the benefits of a balance of usage and sales.  The whole scenario is like a dairy with an icecream business selling its milk to the public while buying milk from another dairy so it can produce the icecream for its icecream division.  Stupid!

All you oil field people who think high oil and gas prices are good for everyone and that capitalism is king in the oil and gas markets had better get a dose of reality.  The society of the world as it stands today hangs by the thread of getting the necessary energy needed to keep the music playing the way it is playing......right now.  Any additional cost or shortages changes those societies dramatically.  If you were to cut off the oil and gas in the world today, 1/2 of the population would be dead in two months.  And I am not joking about those numbers.  I think I may be being conservative.  Oil and gas are the lifeblood of our modern economies and societies.  What happens when you pump out too much of your blood........you're dead.

We are still the biggest consumer of oil and gas.  Why would we be looking for ways to SELL more when we in turn would just have to BUY more?  That balancing act will only get trickier as time goes by.  It will also become more collective in its affects on those dependent upon it................which means all of us.

Tue, 04/01/2014 - 19:22 | 4615417 bshirley1968
bshirley1968's picture

I agree with several of you here that oil and gas prices are too cheap.  Gas should be closer to $8 a gal.  When you consider the energy in a gal of gas it is simply amazing.  The examples are endless.  I like this one take a cup of gas at around .60 cents, put it in a midsized sedan with 6 people and all their stuff and drive 5 miles.  When the car runs out of gas put it all in a wagon and haul it back with you as the mule.........for .60 cents.

Drive a car on one gallon of gas until it runs out and then push it back to where you started......for $3.75.  We want cheap gas and food so we can pay through the nose for bs like iPhones and Xboxes.  The things we need are dirt cheap and the things we want are outrageous!  When we reach a point that food and energy is what we want.......prices will get right, and it will go along way in helping our values and principles.

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