On Keeping Warm
By Tom Whipple
If you heat with natural gas, you must have noticed the price has been going up lately. Well, I have some bad news for you -- this is only the beginning. For the 62 million households heating with natural gas in the United States , the cost of home heating has doubled in the last few years and there is no end in sight.
Unlike the situation with oil and oil products, only a minimal amount of natural gas — around 2 percent of total consumption— is being brought to America in liquefied form by LNG tankers. Currently 83 percent of our consumption comes from our own gas wells and 15 percent comes by pipeline from Canada . The problem is that our domestic production is declining, the Canadians are becoming antsy about sending so much of a valuable resource to the US , and we are going to have to compete with an increasingly desperate world for cargos of liquefied gas.
There are some bright spots. There is talk of a pipeline to Alaska and more LNG compression plants are being built overseas, but these will take years to complete and will only ease the pain a bit, not solve the coming supply crunch. Although we continue to find new pockets of natural gas in the US , those that are being found are smaller and much more expensive to drill. The bottom line is that US natural gas consumption will drop one way or another. We will have rationing by price and there is little anybody can do about it.
Of the 21 trillion cubic feet of natural gas we consume each year, about 4.8 trillion goes to residences, 3 trillion goes to commercial buildings, 7.3 trillion is used to make stuff, and 5.3 trillion goes to generate electricity.
We don't have to worry about industrial users and power generation. When the price of natural gas gets high enough, most industrial users will find it more economical to shut down their plants in North America and rebuild them closer to cheap supplies overseas.
Natural gas used for generating electricity is a different problem. In the wake of Three-Mile Island nuclear accident and growing concerns about air pollution, the US started building gas fired generating plants at a rapid pace. Currently 17 percent of our electricity is being generated by natural gas. Consumption by electric power plants nearly doubled in the last 15 years and over 25 percent of our annual natural gas consumption is used to make electricity. As matter of interest, only about 6 percent of the electricity used here in Virginia is generated by natural gas and is brought online only when needed to meet peak demand.
Gas for making electricity, however, is a problem that ultimately will take care of itself. As the cost of generating power by natural gas goes beyond the cost of other sources of energy, the power companies will switch to cheaper sources of fuel where possible, or pass on the increased costs to customers where they can't. This, in turn, will encourage serious conservation efforts so the net result will be less and less natural gas going to fire generating stations.
Cutting consumption by moving petro-chemical plants overseas and reducing gas-fired generating stations may help keep natural gas prices in check for awhile, but over the longer term, say 5 to 10 years, it is almost certain there will be major reductions in the amount of natural gas available in this country. A speaker at a recent conference I attended pointed out the 50 percent of the gas we will want in 2010 has not yet been discovered. Throw in some reduction in imports from Canada , and you can see that the situation could become very tight by the end of the decade.
As a nation we will have to make some choices.
The first step is to separate uses that must have natural gas, from those for which there is an alternative. For example, there are alternate ways to generate electricity and heat our buildings, but natural gas is necessary as a feedstock for making plastics and fertilizers.
At some point we clearly are going to have to phase out natural gas for space heating. As the oil age winds down, natural gas will simply become too valuable as a feedstock to waste on keeping us warm. As there currently are 62 million residential and 5 million commercial customers for natural gas, this is going to be very long and expensive process -- comparable to replacing all the cars and trucks in the country with more energy efficient vehicles.
The place to start this reducing our consumption of natural is obviously conservation. As a nation, we are going to have to really tighten up our buildings. The goal should be 50 percent or better reduction in natural gas consumption. When natural gas becomes unacceptably expensive as a heating fuel, then good insulation will serve equally well for keeping down the consumption of whatever replaces the natural gas.
For most people forced out of natural gas heating by unacceptably high prices, it would seem that heat pumps are currently the best alternative. Widespread installation of heat pumps would of course immediately lead to a problem of insufficient electrical generating capacity to meet peak demand. While power companies currently have enough spare capacity to support our summer air conditioning demand, keeping all of us warm during a mid-winter cold snap would be a much greater challenge. New power plants would have to be built if 70 million homes and commercial buildings are going to switch to electric heat.
There may be one sensible alternative however -- the geo-thermal heat pump. For those of you not familiar with the genre, these devices exchange heat with the earth rather than with the air, as do conventional air conditioners and heat pumps. The reason we don't see more of them is that it costs a lot to drill one or more 200-foot deep holes in your yard for the heat exchanger pipe. The upside of geo-thermal heat pumps is they can reduce operating costs by 50 percent or more because they don't have to pump as hard to get heat into or out of the ground as they do when they exchange heat with the air.
So here is the issue. At some point natural gas is going be in such short supply and cost so much that, even after much insulating and conservation, we can no longer heat with it. While some can burn wood, coal, corncobs, or install fancy solar heating, this is not going to work for most.
All this cries out for new public policy. As states still regulate electricity (sort of), and are spending money to help the poor pay heating bills, and are controlling the construction of new power plants, and are worried about air pollution and spent nuclear fuel, some official body has got to figure out how to lead us through this maze.
One thing is sure; current patterns of natural gas consumption are not going to last much longer.