Politics

Are High Natural-Gas Prices Here to Stay?

By Clare Foran and National Journal
Equipment used for the extraction of natural gas is viewed at a hydraulic fracturing site on June 19, 2012 in South Montrose, Pennsylvania. Hydraulic fracturing, also known as fracking, stimulates gas production by injecting wells with high volumes of chemical-laced water in order to free-up pockets of natural gas below. The process is controversial with critics saying it could poison water supplies, while the natural-gas industry says it's been used safely for decades. While New York State has yet to decide whether to allow franking, Governor Andrew Cuomo is considering whether to allow limited franking for communities along the pennsylvania border that want it. Economically struggling Binghamton had passed a drilling ban which prohibits any exploration or extraction of natural gas in the city for the next two years. The Marcellus Shale Gas Feld extends through parts of New York State, Pennsylvania, Ohio and West Virginia and could hold up to 500 trillion cubic feet of natural gas.   (National Journal)
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Winter weather is creating a price surge for natural gas, and industrial users of the fuel are arguing that a wave of exports could make the surge permanent.

"Americans are getting hit in the wallets by huge price spikes and supply shortages, but it will only get worse if we send more natural gas overseas to our global competitors," said America's Energy Advantage, an association of manufacturers such as Alcoa, Dow Chemical, and Nucor, in a statement. "It's bad enough now, but this is an eerie foreshadowing of the crisis to come unless there is a change in course."

However, the natural-gas industry and most energy analysts, including financial analysts, predict that price spikes will be short-lived, The Washington Post reports.

"January was the 10th coldest on record, not just a spot of cold," Erica Bowman, chief economist of America's Natural Gas Alliance, a trade association representing natural-gas exploration and production companies, told The Post. "On January 7, we saw the highest withdrawal from storage, 137 billion cubic feet, ever. And we still see prices $6 or less. I would say that's a pretty good sign of how robust the system is."