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When Rep. Michele Bachmann (right) said on the campaign trail she could bring back $2/gallon gas the reaction ranged from skepticism to derision.

Such low prices would hammer the stocks of companies like Exxon Mobil (NYSE:XOM), whose present profits and forecasts are based heavily on maintaining prices at current levels. It would also hurt oil field service stocks like Schlumberger (NYSE:SLB), which are basing their growth forecasts on high prices, not low ones.

Bachmann does have some reason for the prediction, other than confidence she can sink us into another Great Depression. E-mails have been flying around for years claiming the Bakken Field in North Dakota, and related finds are as big as reserves in Saudi Arabia.

But those are claims from investment letters. Actual recoverable reserves may be no more than one year's supply of crude. Even if that can be tapped at the claimed price of $16/barrel, I doubt the drillers would want to let it go for that.

It also needs to be noted that this is shale oil, not pure liquid. Extracting this kind of oil is expensive, and the extraction would require more water than the field can presently access.

Investor Wilbur Ross has been pounding the table for shale gas, saying safety concerns are overblown. Much of this gas is in the eastern U.S., in what is called the Marcellus Shale formation.

As with the Bakken, however, environmental risks here are real. Tapping the gas requires both horizontal drilling and fracking, pumping a mix of sand, water and chemicals into the well in order to fracture the structure.

A recent Energy Department study showed there are serious environmental risks to this and suggested expensive regulations to counter potential damage. The panel was made up of people with close ties to the industry.

If Bachmann is a better geologist than we give her credit for and Ross is right, companies like Exco Resources (NYSE:XCO) and Southwestern Energy (NYSE:SWN) start to look very interesting. But would they remain good investments if they had to produce at Bachmann's proposed price point? Wouldn't they collapse like solar panel makers recently did?

Bachmann's claim is useful because it illustrates the kind of head wind the economy has been under since 2009. It's true – gas prices were $1.79/gallon when President Obama took office, and they're now about twice that. It's the equivalent of the Arab Oil Shock of the early 1970s. Makes it seem amazing we've grown at all. Makes me want to grow my hair long again.

Actually there is a force that can reduce gas prices substantially over the medium term, but one Bachmann may not care to hear about. America has more cheap renewable energy, in the form of waste, than any other country. It's the flip side of using 25% of the world's supply with 4% of the world's population. There are enormous profits to be made in efficiency, millions of jobs to be had there.

So Michele Bachmann, environmentalist?

Source: Whether Michele Bachmann Really Could Give Us $2 Gas