Friday, September 17, 2010
Offshore Option May Lower Natural Gas Bills
Lowering natural gas prices begins with increasing supply to meet demand. That's the word from industry experts and a growing number of Americans are beginning to understand. In fact, Congress is considering legislation that would give natural gas suppliers access to the outer continental shelf to relieve the natural gas demand/supply imbalance. Natural gas is used to meet nearly one-fourth of the country's energy needs and is used for purposes ranging from cooking to dehumidifying schools to generating electricity. However, existing natural gas wells are running low, causing prices to jump. The American Gas Association (AGA) estimates that there is enough natural gas in the outer shelf to allow for nearly 30 more years' worth of American consumption. The new offshore natural gas wells would be produced using technology that not only helps efficiently draw natural gas from the ground, but that helps protect the environment as well. The technology represents a new way to access natural gas and has been seen as a cost-effective solution that balances America's need for more natural gas and its need to protect the environment. In addition, natural gas by its very nature is relatively clean to mine. Unlike oil, it dissipates when it hits the environment (as opposed to spilling), meaning offshore wells pose a minimal risk to aquatic life. In addition to increasing supply, the AGA says accessing the outer shelf will diversify America's natural gas supply, making it less vulnerable to hurricanes and other problems. Currently, about 20 percent of the country's natural gas comes from the Gulf of Mexico. When the 2005 hurricanes hit, production was severely disrupted, causing wholesale natural gas prices to rise, according to the U.S. Energy Information Administration. Adding supply-side resources to other parts of the country can help protect natural gas (and prices) from a repeat of last year. Perhaps surprisingly, consumers aren't the only ones hoping natural gas prices will drop. Utilities say they want lower prices, too. Higher prices have actually hurt natural gas utilities for the simple reason that people use less natural gas when prices are up. By law, utilities are prevented from profiting on current prices. If access to the outer continental shelf expands, it will add to and diversify the nation's sources of natural gas supply, ensuring that there is enough gas to meet demand. A more diversified, less vulnerable supply of natural gas is considered to be the best way to help stabilize prices.