Natural Gas Could Cure What Ails America 20 comments
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How many gas stations have you been to in your life? It’s a nuisance to stop at one so there is not a high value attached to the experience, but a very good majority of people would say “more than I can remember”.
So, how about if you only had stopped at 20 filling stations? Wouldn’t that, as unpleasant as the memory would be, make them each more memorable?
T. Boone Pickens, who some might associate with a recent Quixotian tilt at wind power, might not remember that he has been in the energy business for a very long time and is the person who coined the phrase “it’s cheaper to find oil on Wall St. than in the ground” back in the go-go ‘80s.
The erudite Mr. Pickens penned a piece for the WSJ Op/Ed section on the 17th of this month along with Ted Turner, who, in the decade prior to the ‘80s did a little something else with the wind; like winning and defending the America’s Cup.
The subject of the Op/Ed wasn’t the wind, but then again maybe it was as Mssrs. Boone and Turner were writing about the tremendous amount of natural gas this country has as a natural resource. 2,000 trillion cubic feet of the stuff, which until the U.S. deficit gets big enough to coin a term and we can alleviate the comma is a whole lotta gas.
T. Boone, to get back to the 20 filling stations, says that that is all it would take for the two major East/West roads in the U.S. (Routes 80 and 40) to have in order for 18-wheelers to traverse this great nation on a resource we happen to have more of than the energy equivalent of Saudi Arabia.
Yes, TBP has made his fare share of moola finding tricks and trades in America’s financial system but anyone that is working this hard at figuring out how to make the U.S.A energy independent is certainly trying to give something back to the system that allowed him to achieve what he has achieved.
Pairing the amount of “nat gas” we have with a project to build filling stations and the pipelines to supply them sounds like an extremely logical way to spend stimulus money on infrastructure that would help us gain energy independence. I won’t even ask why that was never considered by Congress.
As the price of Natural Gas seems more destined to see a decimal point before it sees a comma or, more correctly, nothing to the left of the decimal point but you get the point, what is happening with the players in the space.
El Paso (EP) operates the largest interstate pipeline in the U.S. transporting more than ¼ of the natural gas consumed daily.
To say that the CDS/equity combo for EP hit its limits in March makes it like every other combo I speak of so let’s fast forward. After all, it’s Friday and Fred Flintstone is about ready to Yabba Dabba Doo down the back of his trusty dino-loader.
The interesting piece here is that CDS spreads on EP shot up from 555 on August 7th to 757 on the 18th. That’s a 36% rise which was only matched by a 12% decrease in the stock price.
The CDS/equity relationship is not built around hard and fast rules but from my years of watching it does appear to be an outsized move. From here the CDS will have to do a “hard about” as Ted would say, or the stock might.
It's expiration week so we’re all watching the silliness. The amount of natural gas this country has is anything but silly and the need for energy independence and real stimulus (infrastructure) spending has never been greater.
Hopefully someone listens to “T” n “T”.
Enjoy the weekend.
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This article has 20 comments:
The Methanol Institute has made many of these same points in a recent letter to the Department of Energy's Secretary Chu. See,
www.methanol.org/pdfFr....
With due respect to the author's analysis (and more especially Michael Fitzsimmons' excellent series of natural gas articles in SA), methanol should be for the United States what ethanol is to Brazil-- a means to energy independence in the transportation sector. Indeed, the range of US domestic resources that can serve as methanol feedstock is not limited to natural gas but also includes municipal landscape waste, agricultural waste and coal. The resource base for methanol is therefore actually far greater than the natural gas resource base.
You can argue that extensive use of gas would push the price up, and that's true. But LNG shipping and receiving capability would be quickly overtaxed, so those prices would go up too. There is an incredible supply of natural gas in the US, and there's no bottleneck in its supply. The ability to drill and deliver is all in place.
Changing the mentality of Americans is the critical step here. Big oil and the oil service industry, the car-makers and associated parts industry, and service stations and repair shops are all afraid of the change to anything away from the internal combustion industry.
Big oil has been a source of contributions, the mother's milk of politics, ever since Lyndon Johnson brought in Brown and Root's money during the third FDR election (1940).
Thailand has managed the shift to LNG pretty easily, as an example. While they have far fewer service stations than the US, it is also true that a partial shift to LNG could be handled with only a few stations along interstate routes, and the use of LNG to power fleet vehicles, such as urban public transportation and local delivery vehicles, which can return to a central location for refueling.
Instead, we piddle along without a coherent energy policy, pursuing such idiocy as ethanol, which, when corn-based, consumes as much energy as it produces.
Electric cars are fine, but you have to remember that the electricity they use has to be produced by something, and in America's case that is primarily by coal.
The path of least resistance at present is to offer lip service to "clean energy" and "energy independence" while doing nothing to actually accomplish it. Oh, I forgot, we funded the purchases of new cars, the great majority of which run on gasoline. Made those sheiks in Saudi Arabia happy!
there is nothing more efficient than a steel wheel on a steel rail.
> jack
Combined with its $6.8 million outlay in the first quarter, Chevron spent about $12.8 million on lobbying in the first half of 2009, the fourth-highest tab for companies and organizations that file disclosure reports, according to data from the Center for Responsive Politics.
Chevron, the second-largest U.S. oil company behind Exxon Mobil Corp., spent $3.2 million on lobbying in the second quarter of 2008.
In the most-recent period, Chevron lobbied on a variety of issues, including legislation dealing with market speculation and manipulation and Federal Trade Commission rulemaking. It also weighed in on environmental matters and industry-specific issues such as hydraulic fracturing, according to the disclosure form filed July 17 with the House clerk's office.
Besides Congress, Chevron lobbied the departments of Energy, State, Commerce, Treasury as well as the Environmental Protection Agency and the Executive Office of the President.
Among those lobbying for Chevron were Lisa Barry, the former principal deputy assistant secretary at the Commerce Department, and Judy Blanchard, former deputy staff director for the House Committee on Oversight and Government Reform.
www.opensecrets.org/
Congress needs term limits.
Earlier this week, the U.S. government reported that crude in storage, which had been building for weeks, fell by a surprising 8.4 million barrels as refiners cut back on petroleum imports. Crude prices jumped sharply.
Not because of any recovery, and Congress needs term limits.
The railroad industry being well connected to our government had the foresight to lock in fuel prices prior to last summer of 08. So when all the truckers that lost their rigs because of the escalating fuel cost, the major railroad companies made a killing hauling even more freight last year. I believe they had five-year contracts on their fuel cost with suppliers that made them even more money. The railroad industry can haul one ton of coal for around .2 cents a ton, the rest is profit. But then like most industries today, they are conglomerated into just two main companies today, the BN and the UP.
BTW,
Diesel is a by-product of producing gas and should have never been allowed to go that high in cost, but then, the oil industry would not have made all that $$$$.
Note that it has only been recently that new drilling techniques have opened vast new reserves of natural gas. And, it has only been in recent years that LNG terminals have been built in large enough numbers to make shipping it from one continent to another possible at scale, though at about $2 per million BTU.
Anyone thinking that he was pitching wind power is off his/her rocker. The author's assertion about TBP that "anyone that is working this hard at figuring out how to make the U.S.A energy independent is certainly trying to give something back to the system that allowed him to achieve what he has achieved" is similarly off his rocker. TBP was, and still is, trying to make a mint off his own NG reserves and masked it as 'clean energy' by mixing it in with wind power.
Despite, or maybe because of, this point, I'd like to find out a lot more about NG. I think his report had merit, as self-serving as it was, and given NG's decline since he made his testimony, I'd say it's a screaming bargain right now.
finance.yahoo.com/news...