Is a natural gas crisis coming?
Along with spiking gas prices, President Biden can add natural gas to the trouble list.
The cleanest burning fossil fuel is in short supply around the globe, driving U.S. prices up 86% so far this year, flirting with levels we have not seen since 2008.
As the world’s largest producer, U.S. supplies hit a three-year low and are 18% below the average for this time of year, adding fuel to the inflation fire and creating a new energy headwind for President Biden.
Shoulder season in natural gas is the typically low-demand period, March through April, when people rely less on natural gas to heat and cool their homes. Yet, this year with winter hanging on, demand is staying unseasonably strong. Now if we flip to a hot streak when we use more natural gas to create electricity to power our air conditioners, we are starting to make a tight market even worse. This is normally a time when we can build natural gas inventories, but winter has other ideas.
Biden came into office trying everything he could to discourage natural gas production on federal lands that supply 15% of the U.S. natural gas supply, which has only caused the situation to get worse because the decline rate of existing wells is leading to lower production.
Adding to the crunch, Biden took it upon himself to pledge an additional 15 billion cubic feet (bcf) of liquefied natural gas (LNG) to Europe through the remainder of 2022 as the Russia, Ukraine conflict rages on. The agreement additionally promises to increase that supply to Europe to 50 bcf through 2030.
Yet again here comes a contradiction in America’s energy policy. How can you continue to discourage natural gas production at home yet promise more supply to Europe?
Is this not only going to add to the cost for the U.S. consumer? Believe me, I am all for LNG exports, but that should be met with more investment in U.S. production and infrastructure so we can help supply the world. The U.S. has been blessed with abundant natural gas supply that we could use to help supply the world and lead the fight against climate change by supplying the world with cleaner-burning natural gas.
Natural gas can replace coal and dirty oil, something that Europe has had to rely more on because of its over-reliance on Russia for gas. By the end of 2022, the U.S. will have the largest LNG export capacity in the world with the completion of the Sabine Pass and Calcasieu Pass facilities in Louisiana, as well as upgrades to increase production at several existing facilities. Yet we could do more if President Biden allows the U.S. energy industry to do its job.
If you can’t lead, then at least get out of the way.