LNG will be a competitor with dry nat gas but much of US LNG in Gulf and other areas of US comes from Trinindad and Tobago, and their nat gas reserves have been shrinking recently. Plus the weak dollar ahs more LNG going to other foreign destinations where higher prices may be fetched (from EIA outlook):
The largest revisions to natural gas reserve estimates were reported for Kazakhstan, Turkmenistan, and China. Kazakhstan added an estimated 35 trillion cubic feet (a 54-percent increase over 2006 proved reserves), Turkmenistan 29 trillion cubic feet (41 percent), and China 27 trillion cubic feet (50 percent). The United States also reported an increase of 12 trillion cubic feet over its 2006 reserves—a 6-percent increase and the largest increment in U.S. annual reserves since 1970. Declines in natural gas reserves were reported for the Netherlands (a decrease of 12 trillion cubic feet), Trinidad and Tobago (7 trillion cubic feet), Argentina (3 trillion cubic feet), Nigeria (3 trillion cubic feet), and Italy, Norway, the United Kingdom, and Saudi Arabia (about 2 trillion cubic feet each).
Also making LNG out of dry gas uses/wastes a fair amount of gas so a flat carbon tax taking into accountfor this waste would mean LNG prices should carry higher costs compared to dry if such a tax were implemented.
But the bigger picture issue is what effects a carbon tax (or cap and trade or whatever) might have on prices for nat gas vs other energy sources IMO going forward. Probably have to wait and see what those things might do once policies are written up.
Seems too hairy for me to comprehend all this unknown stuff LOL so I'll just stick with nat gas prices are around $9 at Henry Hub per mcf and that bodes well for MXC and their recent royalty interest acquisition:)
I don't mind stealing bread from the mouths of decadence... But I can't feed on the powerless when my cup's already overfilled.
-Temple of the Dog
"We didn't build this company on the sniff of an oily rag."
-Anonymous
AI
