Posts tagged “exports”
This week I am focusing on energy trends in global natural gas (NG) supply and demand; or as the Russians prefer to call NG, “the blue fuel,” due to its blue burning properties.
Unlike our more popular hydrocarbon — crude oil — there is no talk of “peak gas”—at least for now. Global NG production has increased at an annual compound rate of 5.3% since 2000, while crude oil’s comparable growth rate has been 1.0%—so we are not running out of NG, and the world is amply supplied or in balance overall. However, there are supply/demand imbalances across regional NG markets.
The major reason for the regional imbalances is that while crude oil is highly fungible or easily transportable, NG is not, which makes NG globally a highly segmented market. While NG can trade under $3.00 per thousand cubic feet (Mcf) in North America, it commands prices north of $15 Mcf in Asia.
A Changing U.S. Energy Picture
This weekend, Thomas Friedman posed a question in his Sunday New York Times column: “Should the US join OPEC?” I generally don’t like to get into Friedman’s columns, as his name-dropping and taxicab reporting will drive you crazy. However, he probably has the widest readership of anyone in this field, and he does a good job of simplifying complicated issues.
Friedman says the “debate we’re again having over who is responsible for higher oil prices fundamentally misses huge changes that have taken place in America’s energy output, making us again a major oil and gas producer — and potential exporter — with an interest in reasonably high but stable oil prices.”
I hate to say it, but he’s right – although we’re nowhere near being a petroleum exporter today (a clear requirement for membership in the Organization of Petroleum Exporting Countries), I believe that fundamental changes in America’s supply and demand over the next 20-30 years mean that we’re moving towards a world where the U.S. has a real interest in exports – probably not of unrefined crude oil, but of all energy products.