It turns out that China, by capping gas prices in an attempt to shift from coal & oil, has driven consumption up to the point where they're pricing themselves out of the natural gas market.
Despite a significant improvement in Tongchuan's air quality, local leaders are planning a new plant and it is going to be powered by coal. They blame sharply rising gas prices. "We have plenty of coal, why don't we use it?" says Zhao Guanlong, the deputy director of the city's development and planning commission.China has backed out of at least one multibillion-dollar deal to buy gas from overseas oil companies and other deals are in jeopardy. Plans to build more than a dozen terminals to receive gas shipments in liquid form are on hold. Chinese officials are discouraging new gas-related investments because they fear the terminals won't be fully utilized.
This indicates the folly of "energy policy."
Of course, it's going to make LNG more appealing to us, and put more pressure on oil prices, which is why this is good news:
As the Bureau of Land Management faces increasing pressure to speed up gas-drilling permits on federal land across the West, it has begun extending deadlines in Colorado because companies can't start drilling fast enough.BLM officials in Colorado recently changed their rules to stop the clock for drilling companies that can't find rigs to drill gas fields they've leased from the government. Previously, companies that couldn't start drilling before their lease expired lost their lease. M/blockquote>
Since it's smaller companies that are having a hard time finding drilling equipment, this serves as a help to smaller business; and it also suggests that it's time to look into companies that make (not necessarily operate) NG drilling equipment. Note that a large part of the cost of LNG is transportation, so this undercuts that cost.
One other point. The WSJ notes that China has the world's second-largest energy use. But it only just became the world's fourth-largest economy. So it's apparently incredibly inefficient when it comes to energy use, and incredibly dirty when it comes to pollution. Its exclusion from Kyoto is another reason to ignore that treaty.
