Expert: Utilize new-found gas, don’t export it
Government hoping to cash in on quick taxes instead of giving the middle class a $10 billion cut in gas prices, Yossie Hollander says.
Tamar holds 240 billion cu.m. of gas. Photo: Courtesy
Israel’s natural gas discoveries are expected to add a full percentage point to
its GDP growth in 2013, but is its use being misdirected?
expert and chairman of the Israeli Institute for Economic Planning Yossie
Hollander thinks so.
Speaking on a panel at the Herzliya Conference on
Tuesday, Hollander argued that policies meant to quickly make natural gas
resources available for export to the world market were a waste of the resource,
which could be put to better use at home. The government, he said, was hoping to
cash in on quick taxes instead of giving the middle class a $10 billion cut in
“They will steal from citizens’ pockets to get a few more
billion in taxes,” he said.
According to Hollander’s calculations, if
Israel’s economy were instead prepared for use of natural gas, the fuel could
save a lot more energy at home. The added value of trading it, he argued, was
merely $6-8 per billion cubic meters (BCM), where it could add up to $30 per BCM
if used locally.
By his calculations, it could boost the economy by $295
billion: $116 billion in the chemical industry, $88 billion used in transport
and $90 billion in the energy industry.
The government, he said, should
start directing the economy toward importing natural gas instead of oil, so it
will be prepared to efficiently use its own gas resources when they are fully
Other countries with energy profiles similar to Israel, he noted,
did not skew the direction of natural gas usage to the extent Israel is expected
to, using it mostly for electricity.
Instead, he said, they use 36% for
electricity, 17% for industry, 9% within the energy industry, 3% for transport,
3% as industrial substitute for diesel, and 30% for private, commercial and
Gilead Fortuna, a senior research fellow at the Technion’s
Samuel Neaman Institute, agreed on several of the basic points. Industry, he
noted, pays $18-30 per BTU (British thermal unit) of oil, whereas it would only
cost $6 per BTU to import natural gas. Lower energy costs could make industry
generally more competitive on the world stage.
Israel is working to
promote ambitious targets for alternative fuels in transportation, responded
Shlomo Wald, the chief scientist for the Energy and Water Ministry. By 2020,
they are meant to encompass 30% of transport fuels and reach 60% by 2025.
Compressed natural gas in particular, he noted, has great longterm potential for
buses, which would provide the biggest savings if converted from diesel
When it comes to natural gas, he said, the best is yet to come. Gas
to liquid, he said, was set to be the real “game changer” of the market,
comparing it to small Lego blocks that could be used in the future to synthesize
any larger building blocks used in fuel technology.