Monday, June 2, 2014

Short Takes| Before we (Alaskans) start complaining about EPA's new "existing power plant" regulations ...

... take just a moment to consider that one of the greatest beneficiaries of the new rules is natural gas.

Why is that important to Alaska? Even though Alaska gas is not headed directly to the L48 market, at the margin increased L48 demand will reduce the extent of the L48 gas surplus looking for alternative markets (in competition with Alaska LNG) and help support L48 price, which, again at the margin in an increasingly interconnected world, will help support global price levels. In short, a rising tide (or in this case, gas demand) lifts all boats.

 For more background see "Obama Said to Propose Deep Cuts to Power-Plant Emissions," Bloomberg (June 1, 2014) and "Obama EPA Issues Coal-Killing Rules To Cut Carbon Emissions 30 Percent," Forbes (June 2, 2014) ("The effect of the rule will most likely be the dramatic expansion of natural gas as a fuel for power generation").