Wednesday, June 22, 2011

Exporting Nat Gas to Reduce Oil Prices

Interesting comments from the CEO of Cheniere Energy (LNG) on the Mad Money show. The debate continues to rage on whether the US should export the abundant natural gas supplies now provided by shale drilling. Naturally the US would want domestic supplies to fuel domestic consumption, but its apparent that the government isn't going to come forth with policy that encourages the use of nat gas for domestic vehicles.

The next best alternative is for the domestic producers to export that nat gas to foreign markets where not only can they obtain higher prices, but also the use of nat gas by markets more willing to replace gasoline in vehicles with lng would actually reduce the consumption of oil. In theory, this would reduce the prices of oil though it might just increase the prices of nat gas hence diluting the benefit to the US consumer.

The biggest benefit would be businesses in the sector exploring and drilling for nat gas that is now open to the global market. Employment would also pick up as these processes are labor intensive.

See the video below. It is a compelling point if truly extra supply of nat gas to the world market could help reduce the dependence on OPEC oil. Unfortunately though its going to take LNG until 2015 to have the capability to export.



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