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Regional pricing of natural gas

Discussions about the economic and financial ramifications of PEAK OIL

Re: Regional pricing of natural gas

Unread postby LoneSnark » Tue 15 Jan 2008, 11:01:57

$this->bbcode_second_pass_quote('', 'a')s we all know, wealth travels to the cities. So even if it is available, a lot of poor people (rural and urban alike) will be priced out of the market.

Yes, given a supply disruption your second sentence is absolutely true, that is price rationing, those with the greatest pull to divert their spending will do so, be it switching to alternative sources of heating (firewood) or blankets.

As for the first sentence we have been over this, wealth flows between individuals, sometimes it generally flows to individuals living in the cities and sometimes it generally flows to individuals living in rural areas. In the oil age wealth did flow towards the cities more than the rural because on average too many of us at any-given time were living in rural areas. But past performance is no guarantee on future performance; in a non-oil age this flux of people from the rural to the urban may need to be reversed to boost farm production, and to do that will require a reversal of wage differentials in favor of rural areas.
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Re: Regional pricing of natural gas

Unread postby TheDude » Tue 15 Jan 2008, 12:07:10

You're at the nexus of the whole NG supply system, WisCur, wouldn't be too concerned about this affecting you, which is to say it will, and what can you do? When I lived in the big city I had pretty brutal gas bills, now they're utterly painful and my town has 20K people. I'd be more worried about being priced out of NG regardless of where you live:

Image

From Figure 4.8 Costs.

22,754 NG wells were drilled in 2006. NA conventional NG has peaked already, and the unconventional wells that are being tapped are much smaller and decline at extremely high rates. Political opposition to LNG will likely keep it from being a solution; like higher CAFE standards for cars it is a slow fix that will meet plenty of resistance, much to late to have as much impact as simply lowering demand through conservation/efficiency (lower thermostats+better furnaces).

Your best bet in the end is passive solar heating, unless/until we see a massive ramp up of the grid to make up for losses of NG production and new demand from electric heating. I see NG beginning its overall decline in NA within five years - Matt Simmons says this will be a bigger short term problem here than oil.
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Re: Regional pricing of natural gas

Unread postby LoneSnark » Tue 15 Jan 2008, 16:23:35

I saw a documentary on Russia's oil sector and was shocked to see flaring taking place at its oil wells. Trying to produce oil, which they had the infrastructure to export, they were also producing lots of natural gas which they were just burning off.

In a rational world someone would build a natural gas pipeline across the bering strait and export that now-wasted natural gas to North America. I'm not going to hold my breathe, but it would cut down on the LNG problem.
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