Natural Gas Important to America's Energy Future

The need for plentiful, affordable energy, as well as a political interest in reducing greenhouse gas emissions and dependence on foreign oil has pushed natural gas to the forefront of U.S. energy policy. Unfortunately, some policymakers are trying to promote natural gas with subsidies for natural-gas-powered vehicles and infrastructure. Others are pushing for more regulation due to environmental concerns over a critical part of the gas-extraction process, hydraulic fracturing. The reality, however, is that hydraulic fracturing is a proven process that should not be subject to overly burdensome regulations. All energy policies, including those for natural gas, should focus on increasing access, opening markets and ensuring safe operations – not unreasonably increasing regulations or subsidising technologies to force them into the marketplace prematurely, says Nicolas Loris, a policy analyst with the Heritage Foundation.

The possibilities for natural gas to be implemented in the American economy are significant and far-reaching:

Natural gas is a major source of America's electricity generation, providing 23 per cent today.

The United States consumed 24.1 trillion cubic feet of natural gas in 2010.

At current consumption rates, it has been estimated that the United States has 92 years' worth of natural gas.

However, environmental regulation and market manipulation can limit the potential of this valuable resource and reduce its usefulness. Environmentalists have focused their attacks on hydraulic fracturing (fracking) – a process by which trapped oil and natural gas are freed from shale formations. Their fears are unfounded. In the rare events of unwanted environmental outcomes, they were the result of poor well construction or problems with the concrete and steel casings around the well bore. These problems are not a result of the fracking process itself.

Furthermore, market manipulation through tax credits and subsidies, though well-intentioned, will hurt the proliferation of natural gas applications in the long run. For example, the bipartisan New Alternative Transportation to Give Americans Solutions Act, which subsidises natural gas vehicles, thereby selects them as a winner at the expense of all the other applications for natural gas.

Both of these separate barriers to natural gas application, one unfounded and oversubscribed and the other well-intentioned but detrimental, serve to derail the use of natural gas in the long run.

Source: Nicolas Loris, Natural Gas Policy: Access, Not Overregulation and Subsidies, Heritage Foundation, September 21, 2011.

For text: http://www.heritage.org/Research/Reports/2011/09/Natural-Gas-Policy-Access-Not-Over-Regulation-and-Subsidies

For more on Environment Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=31

First published by the National Center for Policy Analysis, United States

FMF Policy Bulletin/ 04 October 2011