December 31, 2012

CHANGE: U.S., Canada, and Oz Prepare for the Asian Gas Wars.

Australia has designs on becoming the leading natural gas supplier for not only Asia, but the entire world. Indeed, the country has the offshore resources and the thirsty markets nearby in Asia to pass Qatar as the world’s top supplier of LNG.

However, Australia’s march towards energy superpowerdom is beginning to run into domestic problems—and new competition. Rising labor costs and high prices in Australia’s booming economy are making it unexpectedly difficult for the Aussies to export their gas and now energy-hungry Asian countries like China and Japan are starting to eye alternative and equally cheap gas from North America. . . .

Whether it’s Australian, American, or Canadian gas that wins the race to the Asian market (and most likely, there is plenty of demand for all three), a few things seem clear:

(1) The long era in which the Middle East was the global supplier of hydrocarbons is coming to an end.

(2) A global switch from coal to natural gas is one of the most practical ways available for civilization to begin the transition to a new kind of energy market. Greens take note.

(3) Asia is not going to be self sufficient in either energy or food in the 21st century, which, from the standpoint of those who hope to see the world becoming a more peaceful and economically integrated place, is a very good thing. The rising Asian powers will need a healthy, stable and secure global system to feed their people and run their economies.

Indeed.