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New BPC Staff Paper Finds Increased Natural Gas Use in Multiple Sectors Unlikely to Lead to Sharp Price Increases

Monday, May 20, 2013

Washington, D.C. – The Bipartisan Policy Center’s (BPC) Energy Project staff today released a report that found the domestic price of natural gas is unlikely to rise substantially under a variety of scenarios, including those with increased demand across multiple sectors. The analysis examines the potential impact of increased use of natural gas under a range of assumptions about future supplies. The report analyzed the combined effect of increased gas demand from multiple sources, including the industrial sector, electric power sector, and LNG and pipeline exports.

The scenarios conducted by BPC staff are intended to bound the range of plausible outcomes for natural gas supplies and demand over the next few decades, as well as provide insight into potential impacts in terms of fuel mix, energy prices, and opportunities to expand natural gas use in ways that improve the environmental performance of the U.S. energy system. The results of this analysis are not intended as forecasts.

Two key policy questions are addressed and answered in this analysis: 1) what are the price impacts when multiple demand drivers act in concert? And 2) how will price impacts vary under high and low natural gas supply assumptions? The analysis found that even when demand for natural gas is high and supplies are low, natural gas prices in the scenario analysis never reach the levels seen in the past years when prices peaked.

Other key findings from the report include (none of which are to be interpreted as policy recommendations):

  1. The United States has ample domestic supplies to meet future demand for natural gas without significant price increases.
  2. Liquefied natural gas (LNG) exports are unlikely to have a large impact on domestic prices.
  3. Increased natural gas consumption in the future will be primarily driven by overall economic growth and increased demand in the electric power and industrial sectors.
  4. The industrial sector could be a major source of new demand for natural gas if projected growth in the U.S. manufacturing base is realized.
  5. Natural gas vehicles stand to make significant gains in market share and vehicle miles traveled by 2035.
  6. In the electric power sector natural gas leads, but renewables also play a significant role.
  7. Energy-related carbon dioxide emissions are primarily driven by overall economic growth.
  8. Pricing carbon results in greater carbon dioxide emission reductions.

Read the report here.

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2013-05-20 00:00:00
“New Dynamics of the U.S. Natural Gas Market” Report Released Today