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Cook Inlet Natural Gas Futures are Confronting Painful Truths

Old car owners are familiar with the agonising “repair or replace” question. Repairing your automobile saves you time and money on car purchasing, but another lingering issue will take you back to the shop sooner or later. Rather than squandering your money, you repair it again. You quickly spend enough on repairs to buy a new automobile and still have money left over if you had done it three shop trips earlier.

If the Bureau of Ocean Energy Management, or BOEM, opens more of Lower Cook Inlet to oil and gas development with Lease Sale 258, we’ll fall into the same trap. Even while renewables provide a better option, “repairing” our gas system with more supplies just doubles down on a weak, uneconomical, and polluting energy source. Southcentral Alaska’s natural gas system has gotten a lot of mileage, but it stopped being really cost-effective in the early 2010s.

Cook Inlet Natural Gas Futures are Confronting Painful TruthsCook Inlet gas prices have been roughly $3 to $4 per thousand cubic feet higher than the Lower 48′s for the past decade. The market exists because Cook Inlet gas producers have received tax credits totaling $1.44 billion over the last ten years, with the remaining obligations being $2.32 billion. It’s tempting to believe that discovering additional gas will help us avoid rising gas prices. But the question isn’t how much gas there is in the ground; it’s how much we’re willing to spend to get it out.

Cook Inlet, according to the Alaska Department of Natural Resources (DNR), contains enough gas to supply demand until 2030 if consumers will support its extraction. DNR estimates that firms could extract between 500 billion to 800 billion cubic feet, or 5 to 8 years’ supply, without losing money at today’s rates.

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