The Dead Economy and Energy

The current consumer-driven economy is dead. Over 2% and sometimes over 3% of GDP growth in 2002 through 2006 was the result of rising housing prices, allowing consumers to borrow against their homes and spend on whatever they choose. Without the mortgage equity withdrawal, the growth in the GDP would be less than 1% from 2003 to 2006. The consumer can no longer borrow on his house and many are having difficulty staying in their house. Consumer credit card debt is high and demand for products and services is low. New car sales are down significantly and the automakers are on the brink of bankruptcy. One positive in the economy is energy prices are dropping and consumers are benefiting at the pump.

The economy should be able to cure itself but can it? The government is doing everything from giving us stimulus checks to lowering interest rates to encourage businesses and individuals to borrow money to improve the economy. Increasing debt levels and over-spending is what got us into this problem. The government should be lowering taxes, providing substantial tax credits for new car purchases and lowering corporate taxes to spur business development without borrowing. The government’s prescription for an ailing economy is more bureaucrats, higher taxes and bailouts to “fix” any and all problems. Obama’s new Chief of Staff Rahm Emanual said recently that “We don’t want to waste a crisis.” or in other words, this is our opportunity to push forward a socialistic agenda because there we be less opposition for the government to get involved.

I have a better solution for President-Elect Obama. We need a new economy, one that is based on productive activities. We need to encourage manufacturing in the U.S. with various incentives. We need to become a major manufacturing country again. If Obama wants to spend taxpayer dollars on infrastructure, how about rebuilding our transportation system by re-building our railroad system for public use which will get people out of their cars. We should encourage all types of oil and gas drilling in the U.S. and remove roadblocks to the efficient development of nuclear power. We need a energy policy that promotes renewable energy, but one that does not encumber the oil and natural gas industry and opens up all areas to drilling to create new energy jobs. We need to promote energy conservation and consider delaying the implementation of climate control legislation or at least re-open the debate on global warming.

Unknown to Lawmakers: The Availability and Economics of Natural Gas

The United States now has abundant and predictable gas supplies. While the U.S. oil production continues to decline and politicians talk about alternative supplies, unconventional gas has helped US natural gas production increase within the last year. Proven natural gas reserves have increased 10 of the past 11 years, according to the Energy Department’s Energy Information Administration, and thousands of miles of new pipelines have been built in every direction. In just the past 10 years, more than 20,000 miles of new natural gas pipelines have been built and brought on line. Those pipelines can carry more than 97 billion cubic feet of natural gas each day.

The bulk of the new natural gas supply is in the energy-rich Rockies and Texas. Producers are drilling traditional oil and gas wells and drilling into coal-bed methane reserves in Wyoming, Colorado and Utah. In Texas, it’s the Barnett Shale and the Bossier Sands tight-gas formations. The U.S. Geological Survey classifies the Barnett as an unconventional gas play. The Barnett shale wells are known for long-lasting production and a high drilling success rate. Two other plays, Haynesville in Louisiana and Texas, and the Marcellus shale in the U.S. Northeast, also are expected to boost U.S. production. More shale plays are expected to be found and large oil and gas independent producers will be the primary developers of these regional gas plays.