Solaqua's Energy Future Project :: Context of the Project

Project Proposal

Section 1.1 Impending Energy Challenges

Section 1.2 The Rising Cost of Energy

Section 1.2.1 Energy Composition

 

 

Natural Gas

 

Natural gas has become a major contributor to US energy production as a fuel both to drive heat and combustion. Nearly 18% percent of electricity generated in the US comes from the combustion of natural gas and 23% of our total energy production is the product of natural gas. With this much of our energy dependent upon the supply of natural gas it is no wonder that the stability of natural gas markets is a topic of much concern.

 

But natural gas markets are not stable, which indicates that future energy supplies through natural gas markets will be subject to similar vulnerabilities that we face today. These vulnerabilities were exploited most recently in the gulf hurricanes but the volatility of natural gas prices is not a new thing, in fact residential natural gas prices have inflated by over 140% from $7 to $17 per thousand cubic feet. Figure 5 illustrates the volatility of natural gas prices over the past 4 years. The top line is residential prices, and the lowest, solid line shows electricity prices.

Figure 5. US Average Consumer Price for Natural Gas (2002 - 2005)

(Source: EIA 2005)

 

From figure 5 it is apparent that electricity prices follow the function of natural gas prices very closely indicating impacts that affect the price of natural gas will very likely also impact the price of electricity. This relationship was felt by citizens of New York City early in January 2006 when they were slammed with a 36% price hike in electricity due mainly to the price of natural gas.

 

The price of natural gas is volatile for a reason.

 

 

Go to Coal?