Monday, May 13, 2013

Fracking, Fuel and Fools

I come across some interesting charts every week.  This is a good one.  It tracks natural gas prices since 2005 in the United States, Europe and Japan.

In 2005, the prices for this commodity were the essentially the same wherever you were in the world.  Prices tracked pretty closely through 2008.  However, since that time, prices have diverged substantially.

Prices in the United States recently were $3.32 per million BTU.  It was $11.77 in Europe and $16.66 in Japan.

What has happened?

This is the shale gas revolution in action that has been made possible by new applications of hydraulic fracturing technology, horizontal drilling and the discovery and development of new sources of shale gas in the United States.

This second chart shows the massive growth in shale gas production in the United States over the last few years.

Have you ever heard anything about the laws of supply and demand in economics?  The supply of natural gas has exploded in the United States since 2008.  The result-a dramatic decrease in its price.  Conversely, in the rest of world, demand is vastly outstripping the available supply with resulting higher prices.

Please keep in mind that it is the extreme environmentalists who don't want the development of any of these natural resources.  Our country and the world does not work without energy.  It does not prosper without affordable energy.

President Obama and the Democrats have been beating the drum for five years that renewable energy is the key to our economic renaissance.  Perhaps that will be true some day.  However, today the best prospects for our economy rest on this shale gas revolution.  It is telling that all of this new development has occurred with almost no federal government support over the last five years.  While the Obama administration was giving billions of dollars to "green" energy companies (many of which have gone bankrupt) the oil and gas industry was actually producing affordable, efficient energy to fuel our future economy.

Shale gas and oil is the best option that our country has right now to remain the predominant economic power in the world.  We have been blessed with this resource and with the technology and talent to take advantage of this fuel.  We would be fools to not do so.  Only fools would keep us from doing so.

Hat tip to PowerLine for the chart on natural gas prices.

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