Energy Outlook Bleak

Michael Zenker, a global gas analyst with Cambridge Energy Research Associates, said natural gas reserves around the world and in America would be the only energy resource that could fill the gap between supply and consumer demand anytime soon.

He warned that not tapping world supplies in places like Indonesia, Yemen, Qatar, Algeria and Russia, or building infrastructure like coastal liquefied natural gas terminals, could prove disastrous for the American economy.

"We were lucky this winter," Zenker said. If it was colder around the country, "we would not have had enough gas supply to meet industrial demand."

...Chris McGill, an analyst for the American Gas Association representing petroleum distributors at the meeting, said an increase in the supply of natural gas is probably not coming anytime soon, and that no other resource is in a position to make up the difference.

"LNG is plan A," McGill said. "There is no plan B."

If LNG is our plan A and we have no Plan B, we really are screwed.

Andrew Weissman took looked real closely at the implications (financially) of a massive LNG strategy

The potential 2025 contribution of LNG imports to the U.S balance of payments deficit is potentially 1 to 2 X the current total U.S. balance of trade deficit, which is at an all time record level (viz., $ 58.3 billion for January of 2005, the most recent month for which data is available). Even for a country with a $ 13 trillion per year Gross Domestic Product (GDP), these are staggering figures.
Over the 20 to 25 year life of these new supply projects, the required payments by U.S. purchasers are likely to total more than the budget for the entire federal government (with over 2.5 million employees) in any one year.

Or the liklihood that supplies will materialize as anticipated

Despite the overall strength of the U.S. economy, the U.S. could be at a significant disadvantage in competing
for these supplies.

We are running the largest trade deficit in U.S. history - and the largest trade deficit of any country in the
world. In part as a direct result, the value of the dollar is expected to continue to decline sharply over the next
several years.

Further, because of our location, for every current producer other than Trinidad, the amount of time a tanker
must travel in order to complete a delivery to the U.S. and therefore the cost of shipping LNG to the U.S.
market is significantly greater than for any other potential customer except Mexico. With tankers potentially
costing up to $ 250 million each, this is a significant disincentive to sell into the U.S. market.

It also means that, by definition, a U.S. manufacturer using LNG will be at a competitive disadvantage to almost
every other manufacturer worldwide, since (due to the shipping cost differential) the cost of LNG delivered to
the U.S. market inevitably will be higher than in any other market in the world.

Or the susceptibility to interruptions this would place us in.

If we rely heavily on LNG imports from West Africa or the Middle East, therefore, and the government in a
host country is overthrown, a strike temporarily shuts down production or, in the case of a Middle East
producer, shipments through the Strait of Hormuz are temporarily blocked, there may be a very real risk that
we'll not be able to keep homes warm in the middle of the winter or that the lights will go out in the summer.

Even if shortages never occur, however, from a pricing standpoint, the potential consequences of a supply
disruption in the LNG market, even for a short period, could also be severe - even if it involves only a single
major LNG project supplying the U.S. market.

THe article is a good read.  LNG really makes no sense as a solution, except to the LNG distributers.

http://www.physics.unc.edu/about/robertsonseminars/weissmanlng.pdf