The headline in our local paper today: Natural gas bills to soar by 20 per cent
What is going on?
Blame the Price of Oil
Everyone knows that the price of oil is way up, but it is an international commodity. Natural gas, on the other hand, usually is subject to more local rules of supply and demand in North America alone. However it does follow the market. Director of Energy Policy Malini Giridhar of Enbridge Gas told the Star: "Oil trades between 6 to 12 times the price of natural gas,The price ratio is now 11 times, which is close to the upper end of the range." Commodities markets are pushing up natural gas in reaction to higher oil prices, she said, rather than to gas supply and demand.
Yes, ethanol is at it again; it is made from corn, growing corn requires lots of fertilizer, and fertilizer is made from natural gas.
Blame Silly Regulations that Distort Markets
In Utah, for example, the government subsidizes the conversion of cars from gasoline to NG, where "the cost of natural gas is only 63.8 cents per gallon equivalent, the lowest cost for compressed natural gas in the country. What this means is that those fortunate enough to own a natural gas powered vehicle can fill up their tank for a mere 5 dollars. By contrast, in California natural gas costs $2.50 per gallon equivalent" which is still cheaper than gasoline. (Read more in TreeHugger here).
Blame the Building Codes, the Construction Boom and McMansions
Natural gas is the heating fuel of choice in the northern states and Canada, and we are burning a lot more of it in bigger new houses with insufficient insulation.
Blame the Russians
While most gas used in North America is locally sourced, Europe relies heavily on Russian gas. Their willingness to use it as an economic weapon, as they did against Belarus two years ago, scared a lot of people. Suddenly security of supply became an issue, and plans for Liquid Natural Gas (LNG) ports become more speculative.
One must also consider the physics of gas versus liquids like oil. Getting oil out of the ground gets harder as we pump it out, but there is still lots there that can be recovered at increasing expense. Natural gas just flows until it just goes "boom" and is gone. Nobody quite knows how much is left or when the taps will run dry. (TreeHugger here) In Canada, a scientist noted ""North America peaked in terms of conventional natural gas production in 2001?2002. Notable examples of the effects of this peak are the dramatic increase in prices for natural gas and natural gas-dependent products, such as fertilizers and plastics. Consumption trends and patterns were also explored. In every case, the phenomenal growth rates in our economy show a complete disconnect with the reality of the resources currently supporting them. Canada, for example, has 8.1 years left in natural gas reserves." (Check out more number-crunching on Treehugger here).
Fortunately there are steps we can take to reduce the risk of running out of gas, and alternatives that might fill the pipes.
The biggest use of gas is for heating; as the price increases there will be greater incentive to change to more efficient appliances. I changed a 50 year old furnace and water heater for a new instant-on unit and cut my gas bill in half.
It is believed that there are huge gas reserves in the Arctic Ocean; pipeline companies in Alaska and Canada are drawing up plans for new multi-billion dollar pipes, while Canadian, American, Russian and Danish navies and troops are running around dropping flags and claiming islands. If the politics don't kill us all first, there might be a lot of gas there.
Natural gas is basically methane, the same stuff that leaks out of landfill sites. In California, they are planning on running their garbage trucks on landfill gas; Most landfill sites are now looking at collecting it. Although natural gas has less carbon per unit of energy than any other fossil fuel, it still creates greenhouse gases. It is also needed for petrochemical production and even the making of gasoline from oil; heating our houses is ultimately not the highest and best use for it. Like everything else, we have to design our houses and our lives to use less; otherwise one morning we might find that the stove just doesn't turn on.