U.S. natural gas exports signal higher prices for U.S. consumers (in the long run)

After reading Art Berman's excellent summary of how fast-growing U.S. natural gas exports are likely to reduce domestic supplies significantly over the next several years as shale gas output begins to decline, I want to assure you that everything has been going according to plan for the natural gas industry, that is, until now.

On Friday the Biden Administration announced a freeze on new permits for liquefied natural gas (LNG) export facilities that could last up to 15 months. The administration said that during the freeze it will review the environmental effects of such exports on climate and the communities in which the facilities are located. It is also possible that despite the industry's assurances, the administration may believe that supply problems and therefore higher prices lie ahead, something that voters won't like.

When U.S. oil and gas producers successfully lobbied the federal government for an end to restrictions on the export of crude oil and natural gas in the middle of the last decade, they loudly proclaimed that America could produce so much of both from the country's shale fields that the United States would have plenty left over for export—and that would boost the American economy while addressing the country's trade imbalance. They promised that this boom would go on for decades.

Of course, what those producers were really angling for was to integrate domestic oil and gas markets more fully with world markets in order to benefit from higher world prices and make a lot more money. In fairness, what they were asking for is what almost every other industry in the United States enjoys, the right to sell their products to the highest bidders no matter where those customers are on the globe.

Naturally, that argument would not have appealed to members of Congress whose constituents prefer low energy prices to high ones, so it was never advanced with any vigor.

Taking a short break - no post this week

I'm taking a short break this week and expect to post again on Sunday, January 28.

What the U.S. grab of ocean seabeds signals

There is an iron rule of resource exploitation: Go after the easy stuff first. If you don't, your competitors will and run you out of business with lower prices. But where do you go when the easy stuff runs out? (And the easy stuff always runs out.) The United States' recent expanded claims to ocean seabeds signals that the easy stuff has run out or will soon. More on those claims later.

The obvious answer to getting more resources is to start digging up the harder stuff. Sometimes it's new technology that makes the harder stuff economical to extract. Heap leach mining was developed to take low concentration ores and leach out the desired metals using chemical-laced sprays that result in a liquid "leachate." From this leachate valuable minerals such as gold, silver, copper and uranium are then extracted through further processing. (There are myriad environmental problems associated with the leachate and the tailings left behind if they spill due to leaks and floods. That would deserve a piece all by itself.)

But what happens when there isn't enough of the harder stuff on land with sufficient concentration of metals to supply the world with minerals it needs for, say, the highly touted renewable energy transition? One possible answer is the seabed which contains nodules of copper, cobalt, and manganese—all of them essential for the energy transition—that might be harvested with emerging undersea mining technology.

The end of paper?

Our civilization depends largely on paper.

                                --Pliny the Elder

Pliny the Elder (23 - 79 AD) was a lawyer and Roman provincial governor who is best known as the compiler of what we would recognize as an encyclopedia, one of the very first. Naturalis Historia filled 10 volumes covering astronomy, geography, anthropology, zoology, botany, pharmacology and mineralogy as well as a myriad of subtopics. Pliny knew something about the value of paper to civilization.

It goes without saying that paper is what made it possible for Pliny's entire encyclopedia to be available to those living now nearly 2,000 years after his death. If at the time Pliny had been able to place his whole encyclopedia on a DVD or flash drive and had forgone creating a printed version, would we know anything about his encyclopedia today?

The 2,000th anniversary of Pliny's birth was marked last year by the discovery of a complete papyrus in an ancient tomb near Cairo which contained text from the Egyptian Book of the Dead. It has apparently been more than a century since the last complete papyrus was discovered. This latest one comes from a tomb that is more than 4,000 years old. Such is the staying power of papyrus.