John Horgan and I had another conversation on Bloggingheads.tv about nuclear energy. He asked a lot of good questions; I hope that you find my responses worth considering. In the above embedded video segment, we talked about the causes of low natural gas prices in the US. I explained how I believe that the situation is not an accident of a passive market. Instead, I believe low natural gas prices in North America is the result of purposeful decision making by people that are carefully selected and are well-compensated for their demonstrated planning skills.
Natural gas prices around the world are several times higher than they are in North America, which is the place where there was a lot of talk about a “nuclear renaissance” during the period from about 2002-2008. It seems fairly obvious to me that the talk of building as many as several dozen large new nuclear power plants, each with the ability to displace between 180 and 250 million cubic feet of natural gas every day they operated, was seen as a real threat to the dominant market position enjoyed by the oil and gas industry.
Low North American natural gas prices have also worked to reduce US coal consumption and resulted in the cancellation of a number of new coal plant projects. That effect is consistent with my theory that low natural gas prices in North America have been the result of a purposeful decision by multinational oil and gas companies to build market share in a lucrative market where the insiders know that there is a great deal of inertia. As some politicians like to remind us, the US energy market is about 25% of the world market.
When natural gas prices inevitably continue to rise (they are already about 75% higher than their nadir), the market will not be able to respond quickly because both coal and nuclear plants take at least five and more likely ten or fifteen years to design, plan and construct.
I am very worried; I hope you are too.
US Energy Information Agency: Today in Energy for September 6, 2013 – Vermont Yankee nuclear plant closure in 2014 will challenge New England energy markets