Are there really depletable resources? The answer was “yes” if and only if there was an associated “cessation, once and for all, of technological progress.” This is clearly not the case for natural gas development. Technological progress is alive and well, and technology is the most powerful non-price determinant of supply. The “theory of the mine” (Harold Hotelling, 1931), not the mine, has been abandoned. (Enron Corp., The 1995 Enron Outlook. Houston, Texas: 1995, p. 8.)
Part I yesterday described my early effort to sell the idea of natural gas as a bridge fuel to environmental NGOs as part of their climate strategy. Behind this effort was Enron’s case for an expanding resource base for gas.
After severe shortages with natural gas during several winters in the 1970s, partial gas price deregulation resulted in artificially high prices, which quickly led to a supply glut and a price crash.…
Editor Note: The important role of defunct Enron Corp on climate issues has been well documented at MasterResource. This post by Bruce Stram, who served as Enron’s chief economist for most of his 20 years at the corporation, adds to the historical record. [Part II tomorrow will describe Enron’s revisionist view of the natural gas resource base that was related to promoting gas as a “bridge fuel” to “sustainability.”]
Several papers I had written made me Enron’s environmental policy lead by 1992. I was blessed with a CEO/Chairman Ken Lay who understood that a carbon tax or cap and trade was good for natural gas relative to other fossil fuels, and we were of course a natural gas company.
We had developed a theme about the environmental goodness of natural gas.…