There’s no better — or bigger — illustration of the reversal of America’s energy fortunes than the Gaslog Salem, the 98,000-ton, 935-foot-long liquefied natural gas tanker that left port in Cameron Parish, La., in late April bound for Portugal.
Since February, more than half a dozen tankers loaded with domestic natural gas that’s been frozen to minus 260 degrees Fahrenheit have left U.S. waters headed for ports in India, Brazil and the Middle East.
About a decade ago, the idea of America exporting liquefied natural gas was as silly as thinking Donald Trump could be president of the United States. For instance, in 2005, Lee Raymond, who was then the CEO of Exxon Mobil, declared that “gas production has peaked in North America.”
The conventional wisdom was wrong. Thanks to the shale revolution, the United States has gone from the prospect of natural gas scarcity to real abundance. This new abundance benefits consumers and our allies and it helps cut carbon-dioxide emissions.
Despite these facts, America’s most prominent Democratic politicians and environmental groups want to end the shale revolution by prohibiting hydraulic fracturing. And they are doing so despite subsidies that favor wind and solar at the expense of natural gas.
This new-found abundance has led to major price declines. From 2000 to 2009, the average price of natural gas in the United States was $5.82 per million Btu. Today’s price: $2.06. Lower-cost natural gas benefits American consumers and American manufacturing. Last year, the Brookings Institution estimated that the shale-gas boom is saving American consumers about $48 billion per year.
Low-cost shale gas is disrupting the international liquefied natural gas market. In December 2014, LNG going into the Asian market was selling for $12.49. Today, thanks in large part to America’s entry into the global gas market, Asian LNG is selling for about $4.24. Cheaper LNG helps America’s allies in Europe by giving them an alternative to gas from Russia, which has long had outsized influence on European energy markets.
On May 9, the Energy Information Administration reported that since 2005, the United States has cut its carbon-dioxide emissions by about 700 million tons, that’s far more than any other country. Why the decrease? The EIA report specifically cited “the decreased use of coal and the increased use of natural gas.” It didn’t mention solar or wind. Not once.
Now let’s look at subsidies. At the end of 2015, the wind industry won a five-year extension of the production tax credit, which pays them $23 for each megawatt-hour of electricity it produces. A megawatt-hour contains 3.4 million Btu, which means wind energy producers are getting a subsidy of $6.76 per million Btu. Thus, on an energy-equivalent basis, wind energy’s subsidy is more than three times the current market price of natural gas.
What about solar? Alex Trembath, an energy analyst at the Breakthrough Institute, has estimated that in 2013, electricity produced from solar was getting more than 100 times the amount of federal subsidies as electricity produced from natural gas and nuclear.
Meanwhile, a dedicated cadre of politicos and activists are trying to kill the natural gas sector. Both of the Democratic contenders for the White House — Hillary Clinton and Bernie Sanders — have made it clear that they want to end the shale revolution by prohibiting fracking. New York Gov. Andrew Cuomo has banned the process in his state. These politicians are being assisted by big environmental groups including the Sierra Club, 350.org, and Natural Resources Defense Council, all of which oppose fracking. Food and Water Watch and dozens of other groups are planning a protest march at the Democratic convention to press for a federal ban on the process.
These politicos and activists repeatedly claim that fracking is dangerous and that it will cause widespread ground water contamination. They stubbornly ignore numerous studies — including ones by the EPA, MIT and, more recently, the University of Cincinnati — that contradict that claim.
The hard truth is that a federal ban on fracking would be catastrophic for the American economy and a windfall for OPEC. It would result in major price increases for natural gas and oil. That, in turn, would cause dramatic price hikes on everything from electricity and home heating to gasoline and fertilizer.
It’s time for some energy realism. The shale revolution has profoundly improved America’s energy fortunes. If opponents of fracking succeed in banning it, they will have succeeded in killing a uniquely American success story that is helping consumers and the environment.
Robert Bryce is a senior fellow at the Manhattan Institute. Porter Bennett is the CEO of Ponderosa Advisors LLC. They wrote this for InsideSources.com.