Monday, April 27, 2015 06:11pm
North Adams, MA now: 48 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
SIGN IN | REGISTER NOW   

Home About Archives RSS Feed
The Independent Investor: The Gas Rush
By Bill Schmick On: 05:05PM / Thursday April 19, 2012
Important
2
Interesting
2
Funny
1
Awesome
1
Infuriating
2
Ridiculous
1
There is talk that this country could be the Saudi Arabia of natural gas. It's clean burning, domestically produced, abundant and offers a concrete exit plan away from this nation's foreign energy dependence. Yet, from Texas to New York, Americans appear to be willing to take up arms against any additional gas drilling.

As recently as five years ago in the U.S., natural gas was in short supply using traditional exploration and drilling methods. Then, engineers had a breakthrough. Two key technologies were discovered — horizontal drilling and hydraulic fracturing (fracking) — were discovered. Horizontal drilling allows gas developers to drill vertical wells that turn and snake more than a mile sideways under the ground. Fracking, which was actually invented more than 60 years ago, involves pumping millions of gallons of chemically-treated water into deep shale formations at enormous pressure. The fluid cracks or widens existing cracks in the shale freeing hydrocarbons to flow toward the well.

As a result of these technologies, vast caches of natural gas trapped in deeply buried rock have been made accessible leading to an eightfold increase in shale gas production. One of these deposits, the Marcellus Shale sprawls beneath West Virginia, Pennsylvania and New York. This deposit alone could produce enough energy to fuel every natural gas fueled device in the nation for the next 20 years.

Natural gas prices have plummeted as a result of all this new supply and are now trading at 10-year lows ($1.94 per 1,000 cubic feet). The prognosis by experts is that prices aren't going to rise anytime soon since there is so much gas still in the ground that the energy industry, policy makers, economists and natural gas customers can't figure out what to do with it.

It has already been a great boom to both residential and commercial users of the fuel. The typical consumers spent $868 on average this winter, a 17 percent decline from last year. Utilities that generate electric power consume 34 percent of the nation's natural gas output. Decline in gas prices are being passed through to customers, who are beginning to see their utility bills decline throughout the Northeast.

Another 30 percent of natural gas is consumed by industries to heat boilers or make chemicals, fertilizers and plastics. Prices have come down and supplies have reached a level that major corporations are announcing large-scale expansion projects close to the sources of these new natural gas discoveries.

Dow Chemical has announced plans to build a multibillion-dollar plant to convert natural gas into the building blocks of plastic in Freeport, Texas. Royal Dutch Shell is building a similar $2 billion chemicals plant near Pittsburg, Pa., close to the output from the Marcellus Shale. These are but two of 30 chemical plant projects that are ear-marked for the U.S. over the next five years.

Steel and iron producers are also excited at the prospect of saving over $11 billion annually through 2025. Steel maker Nucor is switching from coking coal to natural gas production of their iron products in a new $750 million plant in Louisiana. The trucking industry that now consumes just 0.1 percent of natural gas production is looking at a crash program to build natural gas refueling stations along America's Interstate Highway System to refuel new long-haul trucks that will burn natural gas.

All of this expansion means jobs. Economists predict as many as 500,000 new jobs by 2025. At the same time, if we can build the infrastructure to transport and convert our nation's existing oil-based economy to consuming natural gas over the long run, we no longer need fear turmoil in the Middle East. The whims of OPEC will be a thing of the past. At the very least, America could join the league of energy producers/exporters and begin to export our surplus gas to foreign buyers. Europe, for example, pays 75 percent more for their natural gas than we do.

All of this sounds wonderful, yet there is a darker side to this "Gas Rush." Homeowners across the nation in those regions where natural gas is being exploited have witnessed their once-pristine communities become industrial sites. In place of their willow trees or pastures, sprawling plants lit by huge flares late into the night blotting out the moon and stars.

Trucks rumble through neighborhoods spewing noxious fumes that mingle with other possibly toxic substances.  Neighbors keep children and pets behind fences away from containment ponds filled with unknown chemicals. They worry about the drinking water and hold their breath as earthquakes make the windows and china tremble where no such quakes had occurred before.

In our next column, we will examine the darker lining within this pink cloud of natural gas abundance. Opponents of fracking argue that the risks outweigh the rewards in any further development of natural gas. Here we are on the verge of a possible renaissance in American manufacturing and yet New York, New Jersey and an increasing number of municipalities and local governments are ordering a halt to further development.

Is that wise or is America once again shooting itself in the foot? What do you say?

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or email him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.





0 Comments
     
News Headlines
BHS: Not Responsible For BMC HealthNet Fallout
Williams Hires Vice President of Diversity and Equity
Final Jocelyn LeClair 5K Set for Sunday
Goodwill Completes First North County Community Soft Skills Program
BHS Opens Walk In Treatment Center At Pittsfield Price Chopper
'An Uncommonly Fine Head': The Life and Times of Agrippa Hull
Holocaust Exhibit May Find Home in Adams
Social Media Bringing Bullies To Justice
Clark Exhibit Celebrates Underappreciated Medium
Cheshire Gets Gas Pipeline Answers From Kinder Morgan

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (167)
Independent Investor (223)
Archives:
April 2015 (5)
March 2015 (6)
February 2015 (7)
January 2015 (9)
December 2014 (7)
November 2014 (4)
October 2014 (9)
September 2014 (5)
August 2014 (7)
July 2014 (2)
June 2014 (6)
May 2014 (9)
Tags:
Debt Ceiling Election Stimulus Oil Economy Stocks Crisis Recession Europe Europe Commodities Euro Interest Rates Fed Stock Market Debt Energy Metals Housing Federal Reserve Markets Deficit Selloff Currency Congress Bailout Taxes Rally Japan Retirement Greece Fiscal Cliff Pullback Jobs Banks
Popular Entries:
The Independent Investor: Don't Fight the Fed
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
@theMarket: Right Back Into the Range
The Independent Investor: Brazil Not For the Faint of Heart
@theMarket: Earnings on Deck
@theMarket: Will the Second Quarter Be Like the First?
The Independent Investor: How to Teach Your Kid to Become the Next Warren Buffet
@theMarket: The Fed Does It Again
The Independent Investor: Financial Challenges Facing Single Parents
@theMarket: Pay Attention to Diverging Markets
The Independent Investor: Kids & Money
@theMarket: Home on the Range


View All
Baseball: Drury at Lenox
Logan Rumbolt and Kirby Bryce led the Drury baseball team...
Baseball: Westfield Voc @...
The McCann Tech baseball team hit their way to a 8-0 win...
SB: Mt Everett @ Lenox
The final score was Mount Everett 15 and Lenox 3
Berkshire County Invitational...
The boys 4-by-800 meter relay, a 3200-meter battle that...
SB: Mt Greylock @ Drury
The Drury softball team earned its first win of the season...
Touch A Truck 2015
Little kids got to play with big trucks - and school buses,...
Baseball: PHS @ Taconic
Fick finished with two strikeouts while allowing six hits...
Lacrosse: Monument @...
Sean Baruch scored four goals to lead the Pittsfield boys...
SB: Pittsfield @ Hoosac
The Pittsfield High softball team made the most of all its...
STEM, Industry Forum
U.S. Rep. Richard Neal and the Berkshire Chamber of...
BFAIR Annual Meeting 2015
BFAIR holds its annual breakfast meeting at the Williams...
3rd Thursday Events 2015
Director of Cultural Development Jen Glockner and Mayor...
Berkshire Chamber Nite @...
The Berkshire Chamber of Commerce held a networking event...
Tennis: MM Girls @ PHS
Monument Mountain girls tennis team won 5-0 over Pittsfield...
Tennis: MM Boys @ PHS
Monument Mountain boys tennis team won 4-1 over Pittsfield...
IS183 Versace Tchotchke Gala
IS183 Art School of the Berkshires' annual over-the-top...
Baseball: Drury at Lenox
Logan Rumbolt and Kirby Bryce led the Drury baseball team...
Baseball: Westfield Voc @...
The McCann Tech baseball team hit their way to a 8-0 win...
SB: Mt Everett @ Lenox
The final score was Mount Everett 15 and Lenox 3
Berkshire County Invitational...
The boys 4-by-800 meter relay, a 3200-meter battle that...
SB: Mt Greylock @ Drury
The Drury softball team earned its first win of the season...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings
Advertise | Recommend This Page | Help Contact Us | Privacy Policy| User Agreement
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2000 Boxcar Media LLC - All rights reserved