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The quadrennial political silly season is upon us. Presidential candidates are roaming the landscape toting five-gallon cans and moaning about the price of gasoline. The president is posing next to pipeline segments in Oklahoma, assuring everyone he’s drillin’ as fast as he can, man.
Overshadowed by these melodramatic displays is a bit of very good news for the U.S.A.: We’re producing natural gas so fast and in such large quantities that we may actually run out of storage space for it before the end of the year.
The nationwide boom in shale-gas extractions using hyrdaulic fracturing — a.k.a. fracking — already has resulted in record-low prices for natural gas in the U.S. According to The Wall Street Journal, natural gas prices are down 46 percent over the past 12 months, notching $2.36 per million British Thermal Units on the New York Mercantile Exchange. The rapid expansion of gas-field drilling, combined with a mild winter that reduced demand, has filled storage facilities–mainly in underground salt caverns or depleted oil and gas fields–to a current level of 57.8 percent of capacity.
If the mild winter is followed by a mild summer (with less use of air conditioning), many market experts are predicting that U.S. storage facilities will be maxed out by October.
This will be bad news for gas producers, who may have to cut prices further or even halt some production, but good news for homeowners who will get bargain heating bills this winter.
At the same time we’re reaping a bonanza of natural gas, the U.S. this year also became a net exporter of oil for the first time since 1949, primarily due to burgeoning production in the Bakken fields of North Dakota. It’s hard to believe, but the supply of gasoline is greater than the demand for it in the United States.
So why, you ask, are we plagued with $4-per-gallon prices at the average gas pump when we’re surrounded by such a bounty of new energy?
The answer is that the price of a barrel of oil is set by a world market turbocharged with speculation. Huge demand in China and India, accompanied by the drumbeat of potential military conflict in the Strait of Hormuz, has sent the price of a oil surging up to $110/barrel.
What’s the solution for this dilemma? OK, here’s a three-point plan:
1. Convert all vehicles in the United States to natural gas.
2. Join OPEC.
3. Use the revenue from oil exports to balance the federal budget.
The next time you see one of the presidential aspirants careening through your neighborhood looking for votes, flag ’em down and tell ’em to get with the program.