What Would US Natural Gas Exports Mean for Gas and Electric Rates? Increases All Around

I came across this interesting piece on RTO Insider today about the pending FERC decision about whether to allow Dominion Energy to reconstruct its Cove Point, MD natural gas import facility to convert it into an export platform.  The situation with natural gas exports is exactly the same as the “export” of “surplus” electricity from WV’s monster coal plants through the failed PATH power line.

Whenever there is a surplus of a resource in one market area, assuming that demand remains the same, the price of that resource will fall.  That is why WV has lower electric rates (but they are rising steadily) than most other states in the US.  That is also why natural gas prices have fallen dramatically over the past five years in the US.  The shale gas bubble, which may be at or approaching peak production, has created a big surplus in the US which has affected all businesses that use natural gas: the plastics industry, the electric industry and gas utilities.

And what will happen if the US begins to export natural gas to other countries where prices are much higher?  That’s right, your gas and electric bills will go up, because you and your family are now competing with families in Europe and Japan for that gas.

In all the discussions of Cove Point and other export projects, I haven’t heard much talk about this rate impact.  Make no mistake, if exports happen, your costs for heating and electricity will rise along with them.

2 thoughts on “What Would US Natural Gas Exports Mean for Gas and Electric Rates? Increases All Around

  1. This natural gas market is a weird one. While the nation’s pipeline infrastructure us directional based on historical demands, the low commodity prices are making an export market profitable… on paper. I suspect a lot of projects are profitable on paper, but as the quality demanded increases for all uses of natural gas, the price will change (go up).

    We all know the low natural gas prices are making electricity generation look very attractive.

    There is also probably a lot of manufacturing that is attractive to the low natural gas prices. Demand will change. As all usage goes up, the first market to dry up will be the export market. Is it’s wise to invest in an export infrastructure? That market will not last long but be fickle.

    As domestic demand increases. More pipelines infrastructure is inevitable. It’s only time before another pipeline comes to join the three pipelines in the corridor behind my house. Whether from Texas and Oklahoma or the Dakotas, more pipelines are coming through Illinois. Looking at the big picture for the nation, I’d rather see more pipelines to promote generation and manufacturing than to see increased transmission or export natural gas.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s