Reducing market barriers that make it difficult for North America's natural gas sector to compete would increase opportunities worldwide for the continent's ample production, according to a new study by the Fraser Institute.

A combination of increased demand for gas in the United States and Canada, as well as declining production in Mexico, offers new production and transportation venues for North America, said Fraser Institute senior economist Gerry Angevine, who authored "North American Natural Gas: Reducing Investment Barriers."

The nonpartisan Fraser Institute measures and studies the impact of markets and government interventions on the welfare of individuals. Among other things it annually publishes the Global Petroleum Survey of the best places to invest in gas and oil (see Daily GPI, June 25).

"Natural gas accounted for roughly one-quarter of the continent's total energy use in 2007," noted Angevine. "Through technological advances and the potential for recovering natural gas from tight sands and shale formations, North America is well positioned to become entirely gas self-sufficient.

"Unfortunately, existing barriers to investment are hindering development of this extensive resource base, much to the detriment of all North Americans."

In the second of a series of research reports about North American gas resources, initiated by the Fraser Institute in 2007, Angevine's team examined recent gas price patterns and the continental gas supply, demand and outlook. The uncertainties and risks that constrain gas production and transportation facilities also were examined.

Although several U.S. companies are pursuing opportunities to export liquefied natural gas along the Gulf Coast (see related story), Canada now is the only one of the three North American countries that is a net gas exporter, Angevine noted. The country's natural gas industry supported almost 600,000 Canadian jobs in 2008 and contributed more than C$106 billion to the nation's gross domestic product.

To expand global opportunities across North America, the study offered eight wide-ranging policy recommendations to the continent's policymakers:

"Government must avoid intervening in energy investment decisions," said Angevine. "Allocation of resources is best left to those who are motivated by market forces, have an in-depth knowledge of the technologies involved, and are prepared to take risks based on their understanding of how energy requirements are likely to change."

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