Although this years mild winter weather prevented an expected natural gas price spike, Andrew Weissman, editor in chief and publisher of EnergyBusinessWatch.com, has plenty of fears about natural gas supplies.
In a series of articles, he provides a bristling attack on natural gas projections provided by the Energy Information Administrations Annual Energy Outlook for 2007. He feels the projections seriously underestimate future demand for and price of natural gas, but acknowledges that making predictions to 2030 is risky and faces many uncertainties.
The EIAs publication is the most widely available projection of future supplies and prices. According to Weissman it is used by local, state and federal officials and private interests as a guide to rational energy decision making. Unfortunately, if projections are significantly flawed, the public wastes billions of dollars and the economy is severely damaged.
Mistakes have occurred recently; Weissman expects them to occur again. This could happen suddenly if the Iraq war spreads to Iran and Syria or another major hurricane hits the Gulf Coast.
As late as 2002, the EIA continued to predict that supplies of natural gas in the lower 48 states and Canada could be increased 50 percent by 2020. Such optimistic predictions led to a rapid buildup in natural gas-powered electrical generating plants. Dramatic shortages and price spikes that followed forced the closure of U.S. based fertilizer, chemical and plastic manufacturing facilities and their relocation to other countries with cheaper natural gas supplies. Spikes also hurt families and small businesses. In some cases, medical care was abandoned to pay energy bills.
According to Weissman, the flawed report stemmed from methodology used to make projections; errors have not been corrected. He likened it to FEMA preparing for a category III hurricane striking New Orleans while ignoring the possibility of more powerful storms. Television coverage of the aftermath of Katrina provided a vivid image of how a flawed projection of potential damage intensifies human suffering.
Weissman elaborates on major assumptions that undermine the credibility of energy projections to 2030. He believes the report seriously underestimates the amount of natural gas that will be used to generate electricity, provide increased amounts of ethanol and biodiesel, process oil sands into gasoline, meet new environmental standards and provide hydrogen necessary to convert heavier oil into gasoline. He doubts aging coal and nuclear plants will supply the amount of electricity expected of them. He suspects a significant number of these plants will be shut down before 2030. Doubt is also cast on the projected number of new coal plants that will be built as concerns about global climate change intensify. Also ignored is the possibility of oil at $100+ per barrel and its adverse impact on the availability and price of natural gas and liquefied natural gas. For Weissman, the projected outlook of abundant supplies and declining demand and prices is far too rosy.
Natural gas prices remain very sensitive to weather. When faced with an unusually mild winter, supplies can be reduced. Gas wells can be temporarily closed or gas burned in place of oil or coal. When faced with an unusually cold winter or hot summer, prices rise dramatically, as storing natural gas is too expensive to retain substantial amounts. Prices often remain high several years after a spike as it takes from months to years to bring new wells into production.
Past EIA projections have proven far off the mark, and Weissman makes a strong case that the most recent report for 2007 to 2030 is replete with serious flaws. He maintains we would be better served if the simplified model of the reports supply and price projections were abandoned. A series of scenarios that address potential variations in supplies and prices and the impacts they would have on individuals and the economy would provide a better basis for energy decisions.
Potential disruption of energy supplies is far too risky for our health, welfare and wealth to assume our energy future is secure, especially with intense global competition. Prudence dictates we act now to reduce our energy risks by opting for energy-efficient homes and buildings, zero net energy homes, 1-watt homes, geothermal heating and cooling systems, wind power and solar energy. Such investments offer an exceptional rate of return and a lifetime of economic benefits. They are some of the best ways known for a secure energy future for individuals, families, communities and the planet.
Drs. Robert and Sonia Vogl are founders and officers of the Illinois Renewable Energy Association and coordinate the annual Renewable Energy and Sustainable Lifestyle Fair. They have 3.2 kW of PV and a 1 kW wind generator at their home. Forty acres of their 180-acre home farm are in ecological restorations. They are also active in preserving natural areas. They are retired professors from Northern Illinois University.
From the Jan. 24-30, 2007, issue