If the disruption in energy politics caused by a flood of cheap natural gas feels familiar, there’s a reason.
Energy policy is being transfigured alongside the energy economy by technology advances that have allowed access to enormous reserves of natural gas. The fuel is so abundant that production has swollen to near-unmanageable levels for pipelines and storage hubs even as prices have fallen near or below costs to produce it.
It is hard to argue with the reality: The American Gas Association says reserves estimates have risen to 2,100 trillion cubic feet of natural gas as of the end of 2011, a century’s worth of supply. That is disruptive, regardless of the acknowledged potential for hyperbole in industry forecasts.
Politicians are noticing that even ExxonMobil — a mainstay of the oil lobby that has set the tone and pace of U.S. energy policy — is increasingly a gas company, not an oil company. The company is investing billions of dollars in new supply ($40 billion on buying XTO Energy, for starters) and says it expects natural gas demand to rise 60 percent through 2040 as coal use declines.
As natural gas increasingly becomes the yardstick against which all other energy and fuel decisions are made, it is worth remembering the last time the United States made an unwitting and enormous commitment to a single fuel source and the effect of that commitment on the nation’s political and regulatory scene.
With hydraulic fracturing technology as the energy sector’s golden child, it is easy to forget that a similarly industrial-scaled technology proved similarly transformative 30 years ago. That technology disruption, and the market and political changes it wrought, happened in a sector of the energy business even less fashionable than oil and gas: coal.
In the early 1980s, after a spike in the price of coal as OPEC’s oil embargo bit, mining companies invested in massive machines known as longwalls, launching a steady multidecade march to productivity gains and declining fuel prices.
According to National Mining Association numbers, in 1973 roughly 148,000 miners produced 591.7 million tons of coal. At the peak of production in 2007, 81,000 of them produced 1.147 billion tons. For all the mental images we call up of thousands of soot-covered miners on the march, it takes more people to run a midsized high school today than it does to run a coal mine.
Communities everywhere became powered by the consistently cheaper domestic fuel and nascent government efforts to propel a domestic renewable energy business faltered and eventually failed. Sound familiar?
Eventually coal would fuel more than half the U.S. electricity system, providing the kind of cheap, dependable baseload power that allowed a generation of Americans to think energy supply originated at the light switch.
The benefits from coal to U.S. economic performance and living standards were inarguable — as are the potential benefits of replacing most of that coal with natural gas as a new wave of disruption begins. The costs to society are sometimes less obvious.
The effects on Capitol Hill and in the alphabet soup of regulatory agencies, the shifts in patterns of influence of the kind that kept West Virginia Democratic Sens. Jay Rockefeller (28 years in the Senate and going) and Robert Byrd (a record 53 years) in power, thereby in turn keeping the pace of energy market change glacial, are just beginning.
The natural gas rush is more widespread than the coal rush was, but it is already making for some strange political bedfellows. Greater use of natural gas is a stated aim of the Blue Dog Coalition of self-declared fiscally conservative Democrats, and Democratic governors in Colorado and North Carolina have enthusiastically endorsed more natural gas development.
Those Coal Kings of the Senate are aging or gone now, but new Gas Kings are rising. Clued-in Capitol Hill nomenklatura and their bosses are steadily shifting to adapt to the changes under way in gas fields and voter-filled communities of energy consumers across the country.
A shale gale is at hand, and the storm waves are starting to wash up in Washington.