It’s official. The boom in natural gas production and consumption reached a record high last year, according to the Energy Information Administration (EIA) and the trend is expected to accelerate. The Wall Street Journal is reporting that a recent geological study of a key natural gas field in Texas plus other research shows that U.S. natural gas production will continue to grow through 2040. And consumption is expected to increase as well.
U.S. natural gas consumption rose 4.4% in 2012, to 25.5 trillion cubic feet-- the highest level on records beginning in 1949, according to the EIA. The use of natural gas to generate electricity jumped a whopping 20.6% to 9.1 trillion cubic feet, another record high, based on data dating back to 1997.
Natural gas currently accounts for 30% of electricity production and 50% of home heating. It’s also used as a raw material for fertilizer, antifreeze, plastics and other industrial products and increasingly as fuel for motor vehicles.
Nathaniel Karp, chief U.S. economist at BBVA Compass, a Birmingham, Alabama-based bank holding company, tells The Daily Ticker, “If things develop as expected, we could see a new dramatic change in energy consumption…and become a leading exporting country.”
Karp says natural gas will increasingly substitute for imported foreign oil and, as a result, change the current geopolitical framework. The U.S. won’t depend as much on importedoil from the Mideast, which would change the power dynamics in that volatile region. Eventually, says Karp, the U.S. could become energy self-sufficient, able to produce enough domestic energy sources to forgo imports.
Breakthroughs in the drilling technique known as hydraulic fracturing, or fracking, are driving the increase in U.S. natural gas production. Thousands of gallons of water, chemicals and sand are pumped into a shale formation to break apart the rock and release the natural gas that is trapped below.
Such shale formations are located throughout the U.S.—in driving the boom in natural gas are located in several states—including Pennsylvania, Louisiana, Wyoming, Oklahoma, Colorado and Ohio but Texas leads the pack. Karp says the Lone Star state will benefit the most economically from increased domestic natural gas production. Forty percent of new jobs in the industry will be created in Texas— equivalent of 1-1.5 million jobs over the next 10-15 years, says Karp.
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