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What’s driving the development of natural gas?

January 2, 2013

A New York Times article of December 6, 2012 by Clifford Krauss was headlined, “Report Bolsters the Case for Large U.S. Natural Gas Exports.” The title tells it all. The report was based on a study prepared by National Economic Research Associates (NERA) for the U.S. Department of Energy.

NERA is an economic consulting firm, founded and run by conservative economists. In a paper called “Energy Independence” by founder Dr. Irwin Steltzer, written for the Hudson Institute, Dr. Steltzer allows that carbon may be a problem but, “In the near term even with a [carbon] tax, coal and natural gas will be the fuels on which we must rely.”

NERA is consistent in its prescriptions. What is ultimately important is maximizing the corporate bottom line. Thus regulation is detrimental, not surprising since one of the firm’s original advisors was the late Alfred E. Kahn, the “father of deregulation.” A March 2012 NERA report regarding the EPA’s Mercury and Air Toxics Standards concluded that “compliance will induce lower industrial output [because the cost of power, natural gas, and other commodities will increase] and hence... will produce a drag on the economy as a whole.”

This contradicts the current NERA report on natural gas exports, which states that “domestic prices would not rise sharply as a result of exports and that export revenue would generally help most Americans... [including] an increasingly large number of workers [who would] share in the benefits of higher income to natural resource companies whose shares they own.”

So according to NERA, energy independence requires reliance on natural gas, regulating mercury and air toxics will hurt the economy because it will raise the price of natural gas, but exporting the gas we need for energy independence won’t raise its price.

What we’ve always known is verified. Energy independence and jobs were the story given for the need to frack. Now a new story is evolving: exports of gas will raise the stock prices of energy companies and that will enhance your 401K. The story changes, but the real motivation remains the same, as it always has been: the corporate bottom line with its short-term aim for the next quarter’s profit. Never mind the contradictory conclusions. Never mind even the danger fracking poses to air and water.