Natural gas bears still bemoan the cold as it appears that gas prices have to continue to soar because winter refuses to go quietly. The market continues to rise to make sure we refill storage. Yet far beyond the short term influence of weather there is something much more going on in this market. For most of this year we have talked about that historic shift from a market that is oversupplied to where demand expectations will soon start to exceed the expected growth in supply. One part of that scenario is the possibility that the U.S. will start embracing natural gas exports.
The pressure is mounting on the U.S. to share its natural gas abundance with the rest of the world. Countries like Japan are desperate to secure supply. Not only did Japanese Prime Minister Shinzo Abe appeal to President Obama to allow exports, he is now in Russia trying to cut a deal with Vladimir Putin to erase the high price that the Japanese have had to pay. Quartz news says that Japan is the world's biggest importer of natural gas, and its needs have only grown since the nuclear crisis at Fukushima led to the shutdown of 48 of the nation's 50 commercial nuclear reactors. Even if those plants come back online they are under pressure to look for other alternatives.
President Obama's choice for energy secretary is pro-natural gas exports. Yet the AP reports that "Republican Sen. Lindsey Graham of South Carolina is blocking a Senate vote on President Barack Obama's energy secretary nominee to protest proposed budget cuts to a nuclear processing facility in Graham's home state. The Senate was expected to vote as soon as this week on physics professor Ernest Moniz's nomination to lead the Energy Department. The Senate Energy Committee endorsed Moniz in a 21-1 vote last week. South Carolina Republican Sen. Tim Scott cast the only dissenting vote. Like Graham, Scott opposes Obama's plan to cut about $200 million from a project to turn weapons-grade plutonium into nuclear reactor fuel. The plant is being built at the Savannah River nuclear site. A spokesman confirmed that Graham has placed a "hold" on the nominee and plans to meet with Moniz.”
Yet when it comes to gas exports, they are on the same page. One of the factors that has hurt the export debate was the fear that the Environmental Protection Agency (EPA) would declare fracking and natural gas as harmful to the environment. Yet what could be a fracking debate game changer the EPA dramatically reduced its estimates of greenhouse gas emissions from natural gas production. The EPA says that while methane is a potent greenhouse gas it is much cleaner burning than coal. The EPA is saying that tighter pollution controls instituted by the industry resulted in an average annual decrease of 41.6 million metric tons of methane emissions from 1990 through 2010, or more than 850 million metric tons overall. That's about a 20% reduction from previous estimates. The EPA revisions came even though natural gas production has grown by nearly 40% since 1990.
In other words natural gas use has been one of the biggest factors in reducing greenhouse gas emissions. So if the EPA really wants to save the world, it would behoove them to hurry up and approve U.S. exports so we can reduce other countries reliance on coal so they too can reduce their greenhouse gasses. It seems like we are setting the stage for natural gas exports.