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Shales Support Hedging, Longer Contracts, Says Report

The shale gas bonanza makes a strong case for the expanded use of commodity price management techniques, such as hedging and long-term contracts, a task force argues in a report released Monday.

The group -- convened by the Bipartisan Policy Center (BPC) and the American Clean Skies Foundation (ACSF) (see Daily GPI, May 24, 2010) -- said the growth of shale gas production "reduce[s] the susceptibility of [natural] gas markets to price instability and provide[s] an opportunity to expand the efficient use of natural gas in the United States."

With a more stable price horizon for gas, the report also urges state public utility regulators and industry to consider making greater use of longer-term supply contracts.

The group's 70-page report calls on governments to "encourage the development of domestic natural gas resources, subject to appropriate environmental safeguards" given that the efficient use of gas has the potential to reduce harmful air emissions, enhance energy security and improve the prospects of U.S.-based energy-intensive manufacturers.

Among the task force findings:

Task force members represent gas producers and distributors, consumer groups and large industrial users, as well as independent experts, state regulatory commissions and environmental groups.

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