Originally aired: Jan. 8, 2023
Check your fuel bills. Across the board, prices are up. Natural gas is generally considered the cheapest way to heat most homes, yet Americans are paying nearly a third more than a year ago. Lisa Fletcher explains how a big boom in natural gas production here has gotten caught up in a widespread green energy crisis.
Along the coast of Texas and Louisiana, America has become a global gas station at the time of an energy crisis.
Thanks to ports like this, the U.S. has, in the last few years, become the third biggest exporter of natural gas in the world.
And at a critical time, with the war in Ukraine upending Europe’s traditional supply of gas from Russia, the U.S. is stepping up to keep the lights and heat on in struggling places.
Before natural gas can be exported, it’s cooled to minus-260 degrees, turning it into a liquid so cold the ships have to be protected by a curtain of water as they’re loaded, in case liquid natural gas hits the steel hull, potentially causing cracks.
This plant is owned and run by an American energy company called Cheniere. Anatol Feygin is its executive vice president.
Anatol Feygin: A number of countries, Germany and Italy in particular, relied on Russian volume for almost half of their natural gas requirements. So that is a very difficult dynamic to replace when all of the infrastructure that's been built up over generations, that delivers volumes into the center of Europe, all of a sudden is dramatically decreased.
U.S. natural gas production took off around 2007 when fracking helped unlock massive reserves.
Fracking involves injecting high-pressure liquid into cracks in rock formations to force out previously inaccessible gas and petroleum.
As a cleaner-burning fossil fuel, natural gas replacing coal-fired power generation is seen by many as a bridge to a future dominated by renewable energy.
But there's a problem. While U.S. gas production has reached record levels, consumers are also seeing records in terms of the prices they pay, with bills rising more than 20% above where they were this time last year.
Dena Wiggins is president of the Natural Gas Supply Association
Lisa: When there's such an increase in demand, that also creates challenges for people, and the Energy Information Administration says for users of natural gas, they're going to see the highest increases this winter.
Dena Wiggins: Well, I think we need to step back a little bit and look at what happened during the pandemic. Demand for natural gas went down, production went down — a market response. So, coming out of the pandemic, when demand started rising, there's a market response to that, and the market response to that is that producers are producing more. Now, our producers are facing the same challenges that lots of industries are facing now: supply chain and labor shortages and everything else that people are facing coming out of the pandemic.
And it's not just the challenge of prices. The Biden administration’s focus on renewable energy has — according to some in the fossil fuel industry — meant that not enough has been done to incentivize oil and gas production.
Then there’s distribution, which is limited by pipelines. And in some areas, there just isn't a good way of getting more gas to consumers.
Wiggins: Some regions are definitely more constrained, in terms of infrastructure, than others. The Northeast, in particular, is the sort of poster child for we've got a problem. And the pipeline community is willing to build the pipeline. We've tried to get pipelines into the Northeast. You can't seem to cite a pipeline in the Northeast that goes through the state of New York. New York just does not seem to want a pipeline going through its state. And that's a problem.
And she’s right — New England has relatively few pipelines compared to the rest of the U.S., and while the region does have terminals to accept shipments of liquified gas, there's now strong competition from Europe, where buyers are prepared to pay high prices for gas deliveries.
So, the other key question is, if, amid rising demand, we’ll still have enough natural gas to meet domestic needs.
Lisa: A lot of people think we are approaching an energy crisis here in the United States. In our current circumstance, do we have enough to supply what we need here in the U.S. and also help out Europe?
Feygin: In short, we do. The U.S. gas industry, from a production standpoint, has basically doubled since around the 2,000 time-frame. And it has the resource to continue to grow, continue to meet the requirements, not only of domestic needs but also of exports, power generation, and serve all of the customers.
But in the global market, companies sell to the highest bidder. Europe is in dire need, has cash and few options, and has the infrastructure to receive and process American gas — leaving the U.S. caught in its own conflicting energy policies, paying more to heat during what may be a long, cold winter.
Sharyl (on-camera): So is the Biden administration doing anything to try to improve the supply and the distribution of natural gas for us?
Lisa: Well the Biden administration's focus remains on renewables. So critics say that is getting in the way of better gas distribution in the United States, because they say the administration is blocking permitting for new interstate pipelines. And that's a concern if we want to use more of America's huge gas resources and then continue to supply Europe, which is in dire need right now.
Sharyl: We'll continue to keep our eye on the story. Thanks a lot.
Watch story here.