If what I am reading and hearing firsthand from the experts is true, and I actually believe it is in this case, then this may very well be the biggest business story in my lifetime.
And I’m telling you this as a former business editor and now a sage-like business consultant, which means my predictions and assessments are about equal to your average baseball fan. My advice: Beware of editors and consultants. They often seek to impress but not necessarily to impart.
No doubt because of my journalistic roots, I am and always will be a skeptic. I don’t buy everything told to me as fact. I don’t necessarily think that all the dogma out there is done out of malice, to fool you into believing something that is not true.
Rather, I think a herd mentality often dominates, characterized by “informed” people just repeating what they have heard (a manufacturing renaissance is good example) without a lot of critical thinking. One magazine editor criticized me for using the word “hype” in last week’s blog and then went on to defend “renaissance” as “the perfect word.”
No matter the evidence that such a term is premature, my advice to the editor would be, when you’re in a hole, stopping digging.
But good things actually are happening, even if we continue to see anemic GDP growth and high unemployment. Never forget that we have 12 million unemployed people in this country, not counting those who have become too discouraged to look for a job. For them and the millions of underemployed, the Great Recession, which supposed to have ended in 2009, still lingers.
But despite all that, to coin a cliché for my own purposes here, we just might be the cleanest dirty shirt in a bag of dirty laundry when compared to the rest of the world.
To our good fortune, we find ourselves almost suddenly awash in underground seas of natural gas. And that, folks, should give us a competitive edge, particularly in manufacturing, in what has become a very competitive world. I hate to say it, but this really could be that game changer.
The Vast Seas Below
I have always been of the belief that we really don’t know how much oil and gas that we are sitting on. That’s because the technology of extraction keeps advancing and the numbers thereby keep changing. We make educated guesses and those guesses are revealing that we are in pretty good shape in comparison to the rest of the world.
The Potential Gas Committee, in a report published last week, pegged the country’s potential natural-gas resources at 2,384 trillion cubic feet. That is a whopping 26 percent increase from the group’s previous calculation at the end of 2010.
Their estimate of 2,384 trillion cubic feet represents more than 90 times the amount of gas consumed in the U.S. last year, according to federal data. And as I suggested, the increase is driven by technological innovations such as hydraulic fracturing, also known as fracking, that have unlocked gas from shale-rock formations all over this country.
There are a surprising number of shale plays in this country. I can think of four off the top of my head here Texas. Most of you have probably heard of the Marcellus Shale, which stretches across Pennsylvania and into New York, Ohio and West Virginia.
You may have also heard of the Bakken formation, a subsurface rock formation that stretches 200,000 square miles beneath 12 counties in North Dakota and parts of Montana and Saskatchewan, Canada. It was first discovered on North Dakota land owned by a farmer by the name of Henry Bakken.
Some Farmer Logic
Now I will impart upon you an old farmer’s saying, one that Henry may have even repeated: “Sometimes you get and sometimes you get got.”
We’ve been in the “get got” camp for a long time. The 1973 oil crisis, in which Arab members of OPEC proclaimed on oil embargo on the United States, revealed just how dependent we were on what they had. One could argue that our dependency on foreign oil has been an underlying aspect to much of our military misadventures around the world.
I believe that history will one day show just how costly our dependence on dirty foreign oil to our country in terms of blood and treasure. I say “dirty” because the amount of CO2 produced by natural gas is about 30 percent less than gasoline, diesel and fuel oil.
The good news is that we seem to be lessening our dependency on dirty foreign oil. Fracking not only has unleashed a torrent of natural gas, but crude oil production in the U.S. is rising as a result.
U.S. output is expected to top 8 million barrels per day (bpd) by the end of 2014, according to the EIA, the statistical arm of the Energy Department said. That would be the highest level since 1988.
U.S. oil output has surged from less than 6 million bpd in early 2011 to above 7 million bpd currently. Since late 2010, a combination of higher production and falling demand has slashed the need for imports from just under 10 million bpd to less than 8 million bpd, according to EIA data. That’s the good news.
But we still continue to have reliance on more expensive crude from overseas, which is why is why we are flinching at the pumps. That could change, would change, if policy makers in this country would only do the right thing and embrace the energy policy recommendations by T. Boone Pickens.
I think he’s got it right. He thinks Washington has it wrong.
The World According to Boone
“When I started the Pickens Plan in 2008, there were about 200,000 vehicles on natural gas in the world; now there’s about 16 million. That growth’s coming from everywhere but the U.S. Places like Iran and Argentina. China’s already got 40,000 trucks on LNG [liquefied natural gas], and they import the stuff. And here we are in the U.S., with more natural gas than any other country in the world, and we aren’t doing a thing about it. It’s just amazing to me that these dumb f---s in D.C. don’t see this opportunity and try to capitalize on it.”
Pickens wrote that earlier this month for Bloomberg Businessweek. Now I must admit that I am partial to just about any man, including a billionaire, who would refer to our nation’s policy makers as “dumb f—s.”
Pickens is rich and he is old and can afford to tell the truth. I am getting old (but certainly not rich) and trying my best to tell the truth with the possible foolish belief that it may actually help my site selection/economic development consulting business.
Now I’m going to quote some more of Boone Pickens, because this is my blog and I can.
“Transportation in America accounts for two-thirds of all oil use. There are many options, but to me, the one that makes the most sense is natural gas as a fuel substitute for OPEC oil/diesel/gasoline, with a focus on the heavy duty and fleet markets.
“We are now a nation awash in natural gas, so much so there’s a push to allow the export of America’s natural gas to Asia, Europe and elsewhere where it sells for up to four times as much.
“While I fully support the producers’ right to sell into higher price markets, I think it shortchanges America’s energy future. Why rebuild another country’s economy on the back of our cheap energy? Wouldn’t we be better served by rebuilding our own with our own natural gas?”
I swear that Boone possesses the logic of a farmer. Rebuilding our own. Now I do like the sound of that. No more being the world’s oil police. (Our military spends nearly $6 billion a year keeping the Strait of Hormuz open, of which we get about 15 percent of that oil passing through it).
Another “R” Word to Consider
Wisely using and (conserving) the vast natural gas resources that we are blessed with would not only liberate us from buying dirty foreign oil from people who largely don’t like us, but could give, should give, manufacturing in this country a substantial competitive advantage.
As you well know, I have been critical of the use of the word “renaissance” in describing the modest growth in the last couple of years. But I would like suggest another “R” word for your consideration. Revolution.
What is currently happening with our domestic with oil and gas industry could be revolutionary if the “dfers” in Washington would only permit it.
Rebuilding. Revolution. And, yes, even Renaissance. It’s all within our grasp.
I’ll see you down the road.
Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm in Plano, Texas —http://www.barberadvisors.com He can be reached at 972-767-9518 or email@example.com
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