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For the month of April our guest speaker was Ernie Ritacca, from Southwest Gas (SWG). He made a very nice presentation about natural gas and how the company operates. There was a strong emphasis on safety and how SWG responds when customers report the smell of leaking gas.
As he went through his power point demonstration there was, as always, a lively Q&A that made the time fly expanding the level of information being offered. There was one picture that caught my attention. It was of a huge tanker ship docked off the Gulf Coast with a load of liquefied natural gas (LNG) for import into the U.S. It is my conviction that was an out of date photo. Why would the US be importing LNG now that "fracking" has made this country along with Canada the world's greatest reserve of natural gas? In point of fact, the US LNG import market in now extinct.
A quick run - through the math could be helpful in understanding the consequences of the collapse of natural gas prices. In December of 2005 the all time high was $15.38 per mcf (thousand cubic feet). Even as recently as 2008 the price was $14.00/mcf. Currently it's selling for around $2.30/mcf a decline of over 80%
So, what does any of this have to do with us? What do we care Why should we care? Well, for starters natural gas represents over two thirds of the fuel component of our electric bills. Since the price drop started in 2008, NV Energy has rebated hundreds of millions of dollars to us resulting in an approximately 4% cut in the average monthly power bill. Of course, we sure wouldn't know that looking at our bill would we? That, however, is another subject for another time.
The trillion-dollar question sitting out there right now is this: What the heck do we do with all this gas? As always battle lines have been drawn. One side says keep it here even if it means shutting-' down wells and reducing energy employment. Manufacturers say keep it here because the low price is helping to revitalize the country's industrial base increasing employment not to mention the low price will help, a little, to keep a lid on our electric utility prices. Keep it here not just for our direct benefit but for generations to come. It is, after all, estimated to be an 100 year plus supply.
On the other side are the free marketers who say sell it. They point out selling LNG costing $3.00 into world markets buying it at $16-$17 holds huge benefits for the US. They’re talking about hundreds of thousands of jobs and as much as a $45 billion annual improvement in our balance of trade and as much as $16 billion in state and federal tax revenue yearly.
So where are we now? Our LNG import terminals are being reconfigured for export. The Department of Energy has granted at least three licenses to Consortiums to start exporting LNG from the Gulf Coast and more on file. As you would expect politics and the election year are playing a role (the XL pipeline is just a part of a much, much bigger game).
Fracking is a world changer. Not just the energy world. What this country does will affect billions of people for generations to come. Knowing that, what would you do? What do you think the candidates for federal office should do (besides stick their heads in the sand and hope it will go away)?
Knight can be reached at: email@example.com