Thursday, December 12, 2013

Oil and Gas Forecasts Again.

"We are not dealing with an era of scarcity, we are dealing with a situation of abundance," Ken Cohen, Exxon's vice president of public and government affairs, said in an interview. "We need to rethink the regulatory scheme and the statutory scheme on the books."  Wall Street Journal
 "The sheer abundance of oil and gas in the U.S. poses challenges for Exxon. Booming production has overwhelmed U.S. demand, pushing domestic prices lower and eroding profit margins for energy producers."

So, given that natural gas and other hydrocarbon supplies in North America have pressed gas prices down below their energy-equivalent prices to oil, simple economics says that we should export them.  Europeans should welcome this development, as it would ease pressures on them coming from Russian desires to use energy supplies as an economic hammer on Western Europe in the future.

But, we don't want to allow exports because "some fear" that U.S. consumers will pay higher prices for their utilities.  But, despite low prices, utility customers are already paying higher prices than a year ago.  Just check your gas and electric bills.  Look for things called "resource adjustments" or "interim rate adjustments." What we pay here has as much to do with utilities regulation for returns as it does with global energy prices.

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