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Gas boom lowering energy costs

January 29, 2012
Larry Ringler - Business Editor (lringler@tribtoday.com) , Tribune Chronicle | TribToday.com

This is the time of year when many of us in the Mahoning Valley get a triple whammy - it's cold, so our heating costs go up; it's time to pony up our taxes to Uncle Sam, and we get cranky from all the gloomy weather.

I can't help the last one, but I can shed a little light on the first two, thanks to the natural gas, oil, butane, propane and all the other fossil fuels far beneath our feet.

The abundance - although now less than originally estimated - of natural gas in the Utica Shale through eastern Ohio stands to save consumers $16.5 billion on heating costs over a year, the Federal Reserve says.

Natural gas' recent price implosion to a 10-year low around $2.30 per thousand cubic feet, or mcf, could mean as much as $113 billion a year for households through 2015, considering the total effect of lower prices on products and higher wages due to cheaper fuel, says business consulting firm IHS Inc.

IHS added that households nationally are expected to save a total of $926 a year from this year to 2015 in total energy costs, which includes electricity, since more electric companies are using natural gas to generate power.

The money people save from lower natural gas prices will pump up the rest of the economy in the form of more spending on furniture, vehicles, dinners out, clothes; you name it, people will buy it if they have extra cash.

That will encourage companies to expand production, eventually hiring workers, which will create even more demand. It's the economic virtuous circle of supply and demand, the direct opposite of the economic black hole we now have.

The price plunge caused Chesapeake Energy last week to announce it will drastically cut drilling and production in the U.S. because the effort isn't profitable.

However, the Associated Press reported the cuts will come in "dry gas" areas, such as the Marcellus Shale in New York and Pennsylvania. Drillers plan to continue full bore in the "wet gas" shale of the Utica in our area because the rock also contains butane, propane, even oil, which remains profitable.

Keep in mind these are projections, even guesstimates. Numbers are made to be changed.

We now find out that early estimates of how much natural gas is in the Marcellus Shale are being cut by two-thirds.

Thanks to better information on drilling and production, the U.S.Energy Department said last week that about 141 trillion cubic feet of natural gas can be taken from the Marcellus versus earlier estimate of 410 trillion. The gas will last the U.S. about six years at 2010 consumption instead of 17.

So, enjoy lower heating bills while you can. After all, there's nothing anyone can do about northeast Ohio weather.

 
 

 

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