Prediction #3 (of 3) from Energy Consultant Petak: New OPEC for Natural Gas Will be Major Threat to U.S.
Posted: July 23, 2007
Billions of dollars are being sunk into new infrastructure in the Gulf of Mexico to handle imported liquefied natural gas (LNG), which is expected to become a vital resource for the United States as it seeks to meet growing demand with supplies too far away to be transported through pipelines.
LNG tankers unloading in the Gulf are going to be an economic necessity for the U.S., according to Kevin Petak, director of energy modeling and forecasting at Energy and Environmental Analysis Inc. in Arlington, VA.
At the same time, Petak told EnergyTechStocks.com, LNG will be a political nightmare because LNG is likely to be controlled by an unfriendly cartel, much as oil has been controlled for several decades.
As has been reported, a global LNG cartel likely would be dominated by Russia and Iran, two nations with big gas reserves that are no friends of the U.S. and who are inclined to use their energy resources as a political weapon. Indeed, observers say that with their potential to use oil as a political weapon increasingly in question, Russia and Iran are increasingly likely to try and create an OPEC for natural gas. According to Petak, another cartel heavyweight will be Nigeria, whose political unrest regularly causes crude prices to spike.
In a nutshell, “Economically, we must have LNG. Politically, we can’t afford to have it,” Petak told EnergyTechStocks.com. “Just as we were cut off by OPEC back in the 1970s, we could get cut off from LNG by this new cartel at any time and for any reason.”
As this threat of a cutoff grows in coming years, natural gas prices will become more volatile, which could lead to curtailed consumer spending and exasperate economic planners for countries and companies alike, Petak said.
In short: the age of LNG will bring with it still more political and economic uncertainty for the U.S. economy arising from increased foreign energy dependence.