Is Natural Gas Really the Next Big Thing? Part 4

A WCTA White Paper:  J. Thomas Ranken, Washington Clean Technology Alliance, May 2012. See part 1 here.

Changes are on the Way…

Natural gas already plays an important role in all sectors of the economy except transportation.  It is already used widely to generate electricity and to heat water and spaces in industrial, commercial, and residential settings.[1]  Lower costs, along with infrastructure development, can be expected to increase the utilization of natural gas in transportation.

Natural gas has been growing in importance as a source of energy over the course of the last several decades.  In 1965, natural gas accounted for 15.6% of global energy consumption (23 trillion cubic feet).  Today, natural gas accounts for 24% (104 Tcf) of global energy.[2]


Source:  U.S. E.I.A., Annual Energy Outlook, 2009 cited in M.I.T. Study, p. 4.

It is likely, during the next decade, that natural gas use will expand considerably in the electrical power generating sector displacing coal and may begin to displace oil in the transportation and chemical sectors.[3]  Where the total cost of energy is perceived to be cheaper over the life of an investment, natural gas should be expected to be a compelling option for investors.

“The role of natural gas in the world is likely to continue to expand under almost all circumstances, as a result of its availability, its utility, and its comparatively low cost.” [4] (italics in original)

Daniel Yergin, in a Fortune interview, concurs.

“I believe natural gas in the years ahead is going to be the default fuel for new electrical generation.  Power demand is going to go up 15% to 20% in the U.S. over this decade because of the increasing electrification of our society—everything from iPads to electric Nissan Leafs.  Utilities will need a predictable source of fuel in volume to meet that demand, and natural gas best fits that description.“[5]

[1] Massachusetts Institute of Technology Energy Initiative, The Future of Natural Gas: An Interdisciplinary MIT Study (2011), p. 1.
[2] Op. Cit., MIT, p. 4.
[3] Op. Cit., Deutch, p. 82
[4] Op. Cit., MIT, p. 2.
[5] Daniel Yergin, interview, “Will Gas Crowd Out Wind and Solar,” Fortune (30 April 2012), p. 96.