Cheap natural gas and its enemies

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A vast reservoir of clean-burning natural gas could be available at reasonable cost in the coming years, freeing us from some of our dependence on imported energy. Yet, there are those who see such a development as a threat. A small group of billionaires (and mere multi-millionaires), formed under the aegis of the Democracy Alliance

But why would the politically active Sandlers suddenly enter the media world? Perhaps it's because they realize the political and financial benefits that can flow from influencing the news. We may be seeing a sample of this type of handiwork now.

Among the first "exposés" Pro Publica undertook was an attack on energy companies for developing the Marcellus Shale, a vast natural gas reservoir stretching across several states. The "exposé" focused on putative environmental effects that might result from tapping these reserves. The technology used to unleash this natural gas from the shale in which it is trapped is called "fracking." Energy companies inject water, sand, and drilling fluids into the rock to "crack" it and release the natural gas. The potential for this technology is huge: America is a vast storehouse of this type of gas. Much of this is located not just in the Marcellus formation, but throughout the Rocky Mountain states. Also, the Barnett Shale region of Texas and the Bakken Shale region of North Dakota are rich with this type of natural gas.

Fracking is a proven technology. Energy experts are now predicting this technology will help free us from dependency on foreign sources of natural gas. The quantity is so vast that there is even potential for substituting natural gas for petroleum in cars and trucks. Natural gas is a clean-burning fuel that can replace coal in electric power plants. Already, the impact of this technology is beneficial. The prospect of this huge resource being tapped for years to come has brought down the price of natural gas, both in the spot market (where it is priced now) and in the futures market (where it is priced for future delivery). Indeed, the price has come down so much that the publicly held exploration and production companies that focus on natural gas have seen their share prices weaken.

Exxon Mobil was so entranced with the prospects of this technology that it has offered $31 billion dollars for XTO Energy, an energy company that has vast reserves of shale gas that can be tapped at a relatively small cost through fracking.

But there is one potential snag in the deal: Exxon can walk away if laws are passed that restrict the use of fracking...

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