- Boys’ basketball holiday tournament tips off tonight
- Ribbon-cutting for Children’s Holiday Shoppe Nov. 26; shop is open Nov. 29-Dec. 21
- Rockford Rescue Mission invites community to Thanksgiving banquet Nov. 26
- Rockton’s new business district welcomes family owned Dr. Detail U.S. Cellular
- 2014 Illinois Emerging Writers Competition winners named
- Open house for new library executive director tonight
- Freeport murder suspect Damon Dixson taken into custody in Rockford
- Local gas station employee arrested for selling liquor to minor
- Renewable Fuel Standard delay ‘a mixed blessing,’ Bustos says
- Rockford delegation presents inaugural ‘Rockford Award’ to Norwegian Air
If shale gas is another bubble
By Drs. Robert & Sonia Vogl
President and Vice President, Illinois Renewable Energy Association
Years ago, when Congress was debating whether to regulate international financial trades or tax them, the CEO of a Wall Street firm commented that he preferred market swings, as that was when real money could be made. After the economic collapse brought on by the housing bubble, it is possible that shale gas is just another bubble.
In 2003, a dominating news item was the shortage of natural gas. Alan Greenspan and Spencer Abrams claimed the economy was in trouble because gas supplies were inadequate to keep the economy growing.
According to Abrams, natural gas supplies could be found within the United States on land and offshore if environmental extremists would not be blocking access to those plentiful supplies. The National Energy Council, composed of business interests, called for streamlining the permit process for natural gas.
In High Noon for Natural Gas, Julian Darley alerted the public to the long-term decline in natural gas supplies. He pointed out the risks of an all-out effort to add to natural gas supplies and building the costly infrastructure to bring those supplies to market.
He reminded us that our relatively low energy prices result from the cost to customers falling far below the real cost to society in terms of environmental damage from its harvest and excessive use, especially in the United States. Our energy costs would be dramatically higher if the costs spent on our military to keep the energy flowing were included in the price of energy.
We eventually pay the military costs through federal taxes or inflation while sending the wrong price signal to consumers. If the costs showed up in our energy bills, citizens might demand changes in our military policies so public money would be left to meet some of the educational, medical, infrastructure and social needs of our society.
We have low-cost natural gas, as the environmental costs of fracking are not showing up in our energy bills. The promise of a 100-year supply of natural gas is another financial bubble, according to Art Berman in an article in the the November-December 2012 issue of Public Power.
As a petroleum geologist and energy consultant, Berman reminds us the existence of a gas deposit does not guarantee harvesting it will be cost effective. He calculates that only an eight-year supply of shale gas exists in the United States. In an area he studied, he found that more than a fourth of the producing wells are sub-commercial after only six to eight years of production.
Through information he gleaned from financial filings of firms involved in shale gas projects, he found their costs are closer to $7 per mcf (million cubic feet) rather than the industry claim that they can be profitable at $3.50 per mcf.
Eventually, the bubble will burst and we will have to pay a much higher price for natural gas. Once again, we are putting our faith and dollars into short-term solutions rather than using less energy, using it more efficiently and investing in renewable energy. Individuals and local communities would be best served by investing in these solutions, rather than accepting predictions of abundance at face value.
Drs. Robert and Sonia Vogl are founders and officers of the Illinois Renewable Energy Association (IREA) and coordinate the annual Renewable Energy and Sustainable Lifestyle Fair. E-mail email@example.com.
From the Dec. 5-11, 2012, issue