arimoore, via Flickr

by Lisa Huber, via the Rocky Mountain Institute

The recent shale gas boom has gained the reputation as our energy savior: clean, domestic, cheap, and plentiful. But, the attractiveness of today’s low natural gas price can cause us to overlook a serious risk: volatility.

Natural gas is one of the riskiest commodities around, historically bearing twice the volatility price risk of oil. While this is common knowledge among industry professionals and commodity traders, the long-term risk often goes ignored, despite previous attempts to put a price tag on volatility.

(For a more detailed assessment of this topic, download our discussion paper)

Why This Matters

According to RMI Chief Scientist Amory Lovins, “we must not set our sights too low and end up with a 20-year plan instead of a 21st century goal.” This logic on the importance of long-term strategy is the driving force behind RMI’s Reinventing Fire, a vision and roadmap for a 150 percent bigger 2050 U.S. economy requiring no oil, coal, or nuclear energy, and one-third less natural gas.

Without accounting for the volatility risk of natural gas, wholesale power-producing renewables don’t appear very competitive without the support of tax credits (expiring at ...

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