CHICAGO The shale oil and
gas boom in the United States is helping to reduce electricity
costs and give big power consumers, such as aluminum smelters,
more clout in rate negotiations, according to Alcoa Inc.
chairman and chief executive officer Klaus Kleinfeld.
But Kleinfeld warned that
policymakers should be cautious about granting too many export
licenses for natural gas until the countrys reserves are
"We dont want to create an
environment where we sign export licenses and ship the stuff
and then find out there probably isnt enough in the
ground," Kleinfeld said during a question-and-answer session at
the New York-based aluminum producers annual
shareholders meeting May 3.
dovetail with policies advocated by Americas Energy
Advantage. The nonprofit group, which includes Alcoa and
Charlotte, N.C.-based steelmaker Nucor Corp., argues that
exports of natural gas should be monitored carefully (
amm.com, March 27).
But while Kleinfeld warned of
the risks of exporting shale gas, he also called the shale
drilling boom "Gods gift to America" and a development
that has brought natural gas prices down "in an enormous
Lower natural gas prices mean
that even hydropower is cheaper in the United States than it
had been before the shale boom, Kleinfeld said, because when
energy prices were higher, utilities preferred to sell power on
the spot market instead of signing long-term contracts.
"Now they are suddenly seeing
that the market is changing. They are faced with the reality
that they might not have a buyer for their electricity," he
said. That change has seen utilities return to the "old days"
of looking for an "anchor tenant" capable of providing a
baseload of demand. "Given the high energy intensity (of
producing aluminum), we are such anchor tenants ... and this
has become something of value again."