If Illinois continues to rely on natural gas to generate much of its electricity, gas consumers may be looking at $200 to $600 more on their winter heating bills in the future.
Thats the conclusion of a study recently released by Americans for Balanced Energy Choices (ABEC).
Platts, a leading provider of energy-related commodity information, reported two leading suppliers of natural gas predict shortages and higher prices for their product, in large part because of the use of natural gas to make electricity.
Half of Illinois electricity comes from coal generation today. Coal is inexpensive, and we have a lot of it in southern Illinois. Industry pundits say technology makes burning it friendlier to the environment, although environmentalists disagree because of carbon emissions.
Jobs at coal mines and cheaper electricity, however, will be minimal if we keep using so much gas instead for this purpose.
Natural gas is used for residential heating, in industry, to make electricity (peaker plants) and for a certain amount of transportation fuel. Push up the demand in any one of those areas, and it will affect the availability and price.
What industry and state officials are sweating over now are three possibilities: not enough gas and inadequate transmission capability; higher consumer prices because of greater demand; and increased price volatility throughout gas markets.
The ABEC study said families who heat their homes with natural gas could see bills about 20 percent higher in 2010 and up to 40 percent greater in 2020 if we continue to rely heavily on gas to make electricity. Those increases would be over and above the higher prices already forecast for those periods. That translates to between $200 and $600 per household in greater annual energy costs.
As consumers are still struggling to pay last winters high heating bills, the thought of an additional $200 to $600 in home heating costs has to be reason for concern, said Steve Miller, president of ABEC. Natural gas is an essential element of Americas energy mix, but consumers will pay the price if we put all of our eggs in one basket and risk an over-reliance on gas, he said.
Last winter natural gas prices topped $10 per million Btus (British thermal units). Thats more than double the average price of natural gas in the first 30 months of this decade and 10 times the cost of coal in the same time frame.
What does that mean for consumers? As the need for electricity grows, demand for natural gas will rise and it will be up all year, likely forcing the consumer to pay more year round.
Experts in government and the energy industry are greatly concerned whether there will be enough gas to meet demand as projected.
At a time when the U.S. is concerned about continued dependence on imported oil, relying on gas to generate electricity will lead to greater dependence on imported natural gas.
Therein lies another dilemma. Our natural gas stocks are about 39 percent short of last years supply (1,199 billion cubic feet). We are running out, and no replacement supply exists.
Thats not true of the rest of the world. Large reserves of natural gas remain untapped, especially in Russia.
But that is of little help to us. Why? Because shipping natural gas overseas is not a very practical proposition.
First, it must be converted from a gas to a liquid. That requires expensive processing facilities. Then it has to be shipped in special Liquid Natural Gas (LPN) tankers. We have only about four of these vessels.
Next it must be off-loaded at special ports with sophisticated facilities to change the liquid gas back to a gas. This results in losing part of the energy in the gas. Added to that is the estimate that a round trip of an LPG tanker from the Mideast to America and back again would take about six months.
Natural gas is a great fuel, but opponents of new coal-based generation act as if it is a panacea…thats just not so, Miller said. America has a 250-year supply of coal and the technology to allow us to use this resource to provide affordable and reliable power while still reducing emissions and improving air quality.
If we make the mistake of over-relying on a particular fuel for powering new electricity-generating plants, our energy security and the pocketbooks of American consumers will be put at risk, he said.
Consumers are advised to plan now for the coming heating seasons costs. Efficiency is the greatest plan available, such as installing new furnaces, caulking, weather-stripping and energy efficient windows.
Glass solar walls for southern exposures, solar hot water heaters, fireplace inserts and exterior wood burning furnaces are also options.
Solar arrays, which can power electric heat, are funded up to 60% of the total cost by the State of Illinois.
Attend the 2nd Annual Illinois Renewable Energy Fair, August 8 and 9, at the Ogle County Fairgrounds in Oregon, Ill., for more information on all of these options, or call 815-732-7332.
A natural gas shortage and higher prices are coming. Get ready.
Frank Schier contributed to this editorial.