Faulty Analysis Always Leads to the Wrong Conclusion
The headline and opening sentence are simply not borne out by the facts. The quality of the analysis is confirmed with the quote "my good friend David Hughes" ... this pathetic soul has been ranting chicken little like about impending shortages of gas for a number of years. Discredited every month as shale gas production numbers increase. He has been dismissed by all other than the Green party and Sierra Club - he is simply not credible. If you spend some time looking there is good data out there without paying hefty fees or relying on typically outdated and usually incorrect and revised later EIA data. Navigant for example shows that shale gas production increased every month from may 2011 at 24.5 BCF/day to just over 27.5 BCF/day. Barclays shows the same numbers. This despite severely depressed prices. Overall gas production growth is slowing due to low prices. And producers are seeking other options such as LNG exports. A healthy market will support more a healthy gas industry. But if I read your underlying message it is to prevent producers getting a fair return so we can protect US consumers. Might be fair if the government funded the developments in the shale industry but they didn't. By my calculations the industry spent well over $800 Billion the last decade. And your answer is : impose trade restrictions. A sure way to encourage further investment. Also took the time to read the EIA presentation - slide 17 shows that even under their reference case shale gas production increases from about 5 TCF/yr to about 13+ TCF/yr. And consistently the EIA has underestimated shale gas production the past 10 years - so they include two much higher cases.
Will production continue to grow as prices go south - of course not. Will LNG epxorts cause some price increase - study after study after study shows a minimal increase (not even back to 2004 level prices. Take an elementary economics course and see what a flat supply cost curve implies for .Will a slight increase in gas prices mean that gas cannot compete with coal? No - especially if some form of carbon tax is implemented.
I don't understand how you can come up with that headline or your opening sentence. Do you not read or understand the data - or is it just that you expect that most of your readers will move on after 20 seconds and not question your analysis? This is a dishonest and disingenuous article - and while Mr. Hughes may be a fine fellow and perhaps a good fishing buddy his knowledge about the current energy industry is about as profound as a Goofy mascot at Disneyland. Spend some time getting some real data - or heavens forbid actually talk to a producer or someone who understand the industry to understand what is going on.
