Gas prices have been extraordinarily volatile in recent years, peaking last year at $13 per thousand cubic feet before nose-diving below $3, but such roller-coaster rides may be a thing of the past. Producers say shale gas can be extracted in advance when prices are in the $6 range, and some existing wells can be profitable even at rock-bottom prices. With supplies available at predictable costs, long-term contracts between gas producers and consumers, similar to those seen in the coal industry, may re-emerge to allay customers concerns about price.
The economic payoffs from increased production are likely to be significant. A recent Penn State University study of the Marcellus shale in Pennsylvania concluded that development will pump $14 billion into the states economy in 2010 alone, growing to $25 billion by 2020, generating 98,000 jobs and close to $1 billion in state and local tax revenues. Shale deposits also have the political benefit of geographic diversity from traditional gas-producing states such as Texas, Louisiana, Colorado and Kansas to coal states such as Illinois, Indiana, West Virginia, Ohio, Pennsylvania and New York.
The House-passed climate bill provides billions of dollars through 2025 for research and demonstration of carbon-capture-and-sequestration technology in coal plants a worthy objective, and one that should be extended to gas plants but we could also make real environmental and economic impacts right away. The Senate climate bill should:
As a first step, require increased use of natural gas generation where it can be dispatched reliably and affordably, ahead of pre-1970 coal-fired power plants.
Conduct an inventory of the coal fleet to determine which plants are candidates for retrofitting with advanced carbon-capture technology and which are more suited for repowering with natural gas.
Support gas research that focuses on reducing the costs and minimizing the environmental impacts of production.
Provide incentives for repowering the clunkers converting dirty old coal plants to run on clean-burning gas.
Current federal policy support for natural gas is so weak it has prompted some gas advocates to dub natural gas the Rodney Danger-fuel of the U.S energy portfolio. In less challenging times this neglect was simply shortsighted and wrong. In a world where CO2 emissions threaten to alter irrevocably the world we live in, it borders on policy malfeasance. Natural gas can power our economy, clean up our air and reduce global warming emissions. We should take advantage of it now.
Sen. Mark Udall (D-Colo.) serves on the Energy and Natural Resources Committee. Timothy E. Wirth is the president of the United Nations Foundation and former undersecretary of State for global affairs. He represented Colorados 2nd district in the House from 1975 to 1987 and served in the Senate from 1987 to 1993.