Look at the real solution
To The Editor:
Support for the Constitution and Leatherstocking pipelines is based primarily on the false promise of affordable shale gas. False, since the price of this gas is too volatile to make it a reliable energy source in the future.
With so much drilling, and not much demand, there is now a glut of gas. Because of this, prices sank from over $13 a unit in 2008 to under $2 in 2011. Today the price is about $4. Yet the breakeven cost of production is over $8. The volatile price of gas will be determined not by local costs but worldwide supply and demand.
To maximize profit, gas companies have pressured the US Department of Energy (DOE) into considering the export of liquefied gas (LNG) to foreign countries. Twenty export applications have been filed. The DOE secretary commented, “If the government does not allow more exports, companies will not have the economic justification to drill for the gas at all.”
Obama said the US will be a net gas exporter by the year 2020. When this occurs, prices will rise to come into balance with LNG prices worldwide. In Europe that price is $12. In Japan it’s $15. The VP of energy at Dow Chemical commented that exports “would raise prices dramatically, and would have a very negative effect on this industry and a massive ripple effect economically.” The result will be that gas drillers will make more money, while natural gas prices will increase for Americans.
Many companies and institutions have shown interest in $4 gas. Will they still be interested when the price rises to $15?
The Leatherstocking pipeline’s source of supply, the Constitution pipeline, if it’s ever built, will be significantly delayed. This makes the Leatherstocking completion date many years from now. By the time the Leatherstocking pipeline could begin supplying Delaware County, the price of shale gas will be too high to be an affordable energy source.
So “drill baby drill” results in our turning the idea of American energy independence into a fantasy! Renewable energy, conservation and efficiency are the only real solution.