Nothing is a better testament to Congressional dysfunction than this recent article in the New York Times about the "progress" of the natural gas bill working its way through Congress. In the article, Aubrey McClendon, CEO of Chesapeake Energy (NYSE:CHK), aptly sums up the situation. "Never in my life have I been confronted with something so obviously easy and good to do and have such Congressional apathy."
Does anyone really believe that it is both physically and economically possible to drill a hole in the ground and pump millions of tons of CO2 into the hole? Even if this were true (it is not), why not start with a fuel (natural gas) that emits 50% less CO2 than coal in the first place? Meanwhile, solely focusing on CO2 emissions ignores the even bigger problem of toxic metal particulate remnants from burning coal. But I guess when you build a big enough store of those pollutants, you just allow most of it to run into the Tennessee River and then dig a big hole in Cumberland County, TN to bury the rest.
The big picture here is that the oil and coal lobbies are flush with cash (and politicians) after decades of subsidization by the US government. The newly created natural gas lobby is not doing a good job of dealing with the entrenched powers that be. While the nat gas lobby has begun a necessary campaign in Washington, DC, they cannot be successful with this strategy alone. The oil and coal powers are too entrenched and too powerful. The only way the natural gas lobby can be successful is going straight to the American people. In this respect, they are failing miserably. They must start advertising the advantage of having a Fuel Systems Solutions (NASDAQ:FSYS) "Phill" to fill up your vehicle in your own garage. They have to make the other states feel incompetent by playing up states like Utah and Oklahoma where folks are filling up with US produced natural gas at half the cost of foreign oil derived gasoline.
The natural gas lobby needs to work with Toyota (NYSE:TM) to help make their natural gas/electric hybrid concept car a reality by bundling it with an FSYS "Phill" as a home based solution to reduce foreign oil imports. Most Americans are not even aware of such a solution and the natural gas lobby has done a poor job of educating them. The nat gas lobby must become more proficient in showing the economic consequences of the US being addicted to foreign oil (a negative S&P500 for the last 12 years, a falling US dollar, going bankrupt fighting oil wars, etc. etc). They simply must play hard ball. It's obvious that the coal and oil interests have been, are, and will be doing so. The natural gas lobby needs to take off the gloves. If the natural gas bill fails to enact robust natural gas transportation and electricity generation policies, it will be the natural gas lobby's fault for failing to make the case to the American people as it is the people who must threaten to kick the bums out of office if they don't support it.
Meanwhile, market activity today is reminiscent of the pre-collapse days. The US dollar is sharply lower while oil and gold are higher. The big difference now is that foreign countries, first Russia, then China and Brazil, finally even Germany and France and the United Nations itself are clamoring for an alternative to the US dollar as a world reserve currency. This will be the nail in the coffin of economic independence for the US and guarantees the "new world order" that Bush #1 first spoke of and that Bush #2 (and now Obama...) worked so hard to enable. Who can doubt that the combination of US government debt and foreign oil addiction based wealth outflow will eventually mean the end of the US dollar? I mean, is there a bigger Ponzi scheme than the US Treasury and Federal Reserve? If Madoff goes to jail, where do Paulson, Bernanke, and Geithner go? I'd love to ask Ron Paul that question.
The only cure for eventual US insolvency (and loss of sovereignty) is a strategic long-term comprehensive energy policy that reduces foreign oil exports, invests in natural gas transportation infrastructure with an eye toward a future hydrogen based economy, and a reduction in US deficit spending. Still, Congress is asleep and content to support failed 20th century liquid and solid fuels like oil and coal while ignoring the one domestic fuel that is cleaner, cheaper, abundant, and can significantly reduce foreign oil imports: US produced natural gas.
So what is the American investor to do? Buy gold and buy oil and get out of broad US equity investments like the S&P500. Owning ExxonMobil (NYSE:XOM), BP, Chevron (NYSE:CVX) and ConocoPhilips (NYSE:COP) will protect your purchasing power (at least until Wall Street itself implodes) from the next big spike in oil prices which I expect within the next 2-3 years. Petrobras (NYSE:PBR) and StatOil (NYSE:STO) are oil plays that will also benefit from a falling US dollar. Investing in gold bullion and other precious metals buried in the backyard (or GLD for those that think paper gold is gold), a big garden, a fish pond, and some hunting property are also good strategies. Meanwhile, expect a rebound in natural gas prices as depletion rates kick in supplies begin to fall.
The US is missing a great opportunity to build our natural gas infrastructure and rejuvenate the US auto industry with NGV conversions and nat gas/electric hybrids. The natural gas lobby must share the blame with Congress for this unfortunate state of affairs.
Disclosure: Long COP and gold.