Demand for liquified natural gas in Europe in Asia is very high, but the price for it is $10 to $16 per million British thermal units. It is much cheaper in the US right now at 3.70 per million British thermal units. The problem however is that the US does not have the needed facilities to liquify gas for exports. This presents a good opportunity for President Obama to add billions of dollars to the US economy, create thousands of jobs, and narrow the trade deficit. The price of natural gas in the US has fallen so low that many companies no longer think of it as profitable to drill, and the number of drilling rigs gas fallen by almost half this year. If the US starts exporting it, it would drive the price up a bit and make it more profitable for companies.
Even though drilling for natural gas poses the threat of contaminating land and water, I think it is a good idea to start exporting the liquified natural gas. It could help boost the economy and also help those looking for work by providing about 60,000 long term jobs and around 8,000 temporary construction jobs for the new facilities.
http://www.bloomberg.com/news/2012-11-25/natural-gas-exports-could-lift-u-s-trade-and-economy.html
This although would be a costly project to start, has a great chance of being beneficial depending on how much natural gas can be found in the US. Because as first prices may have to be costly to try and return capital at a faster rate then maybe later slow down. Also they may be no harm in increasing the price of natural gas, if the demand domestically does not warrant a raise in prices then doing it at world market prices is reasonable to be able to give existing producers greater profits
ReplyDeleteHow much would exporting natural gas out of the U.S. raise the price? The initial cost of building the new facilities, and finding the natural gas is going to be very expensive. If the U.S. decides to do this would it truly be beneficial? While the price of natural gas is higher in the world market, it may not be high enough to be profitable for the U.S. Other countries may have an advantage over the U.S. in producing natural gas; therefore, its more cost effective for the U.S. to import the natural gases from those other countries, while exporting other goods instead. I do agree that if the U.S. could export natural gas while making a decent profit, that they should. Being able to add jobs to the workforce is always a positive thing. I am just not sure that it would be something the U.S. can do without further investigation.
ReplyDeleteThere is obviously several pros and cons to mining natural gas. Pros being that we have an alternate source of energy as well as providing jobs for thousands. These jobs also mean and increased flow of money in the economy. Cons are the threat to the environment as well as the risks that it may not be very profitable for us. Being that it is so much cheaper in the U.S. we could put and export subsidy on it. This would increase production in the U.S. as well as increase our profits. Because the subsidy wont make prices higher than they are in Europe and Asia, countries will continue to import from us because of the price difference. I do feel that there is a need for increased investigation and research though before anything is begun.
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