Seeking Alpha: "Foreign Oil Dependency The Root Cause of America's Economic Pain" - Solution NG as Transportation Fuel
Foreign Oil Dependency The Root Cause of America's Economic Pain
(Excerpt / Full feature can be accessed by clicking the link below)
"Despite all the grumbling by American economists about the Chinese keeping a lid on the value of the Renminbi (yuan), it is not the primary source of economic pain in America today. For this reason, Ben Bernanke's "QE2" policy (i.e. printing money) will not be successful because it does not attack the root cause of U.S. economic weakness. What is the root cause of American economic pain, and how can I make such a confident statement?
The U.S. Commerce Department reported September 2010's trade deficit to be $44 billion dollars. During that month, crude oil averaged around $75/barrel and the U.S. imported about 12,000,000 barrels/day. This means the September 2010 monthly bill for oil imports was roughly $27 billion dollars.
The point is this: out of a $44 billion dollar monthly trade deficit, $27 billion of that was for one commodity alone. Unfortunately for the U.S., it happens to be the most strategic commodity of all: OIL. Put another way, imported oil made up 62% of the U.S. monthly trade deficit. This is not an aberration - it goes on month after month, year after year. And as the price of oil goes up, so too does this problem. It is quite simply draining away the wealth of America. We are burning it up in our cars and trucks......
OIL PRICES
So while I have spent the last 5 years trying to convince Americans and American policymakers that natural gas transportation was the solution to the problem, I realize now the real problem is that the American Congress, as well as its economists and financial media, are in complete denial about the imported oil crisis. Everyone knows the first step to solving a problem is to understand the problem. And this is why the Federal Reserve and American economists will fail in their attempts to revitalize the U.S. economy. They simply refuse to own up to the blatantly obvious fact that the American economy is built on a very badly constructed foundation: it is at the mercy of foreign oil to power it.
Further, the problem is going to get much worse before it gets better. I am a firm believer that worldwide oil production will not keep pace with worldwide oil demand given a functioning worldwide economy. What we will see in the future is not very hard to predict:
- the American economy will begin to strengthen and gather steam
- oil prices will rise as oil demand increases with the strengthening economy
- the American economy will peter out as high gasoline prices pummel the consumer
- inflation, higher unemployment, higher fiscal and trade debts will follow
- the currency will, over the long haul, continue to weaken
In other words, the American economy is now completely dependent on the price of the most strategic commodity of all (oil) and the fact that it must import 65% of its consumption.
Meantime, a solution is also staring us in the face - natural gas transportation."
(full feature article and comments can be accessed via this link to the Seeking Alpha website)
http://seekingalpha.com/article/238920-foreign-oil-dependency-the-r...
Tags: Economy, Gas, NG, Natural Gas, Oil, Transportation
Views: 182
Replies to This Discussion
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Permalink Reply by P.G. on
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Good luck in getting the Petroleum lobby out of DC....
Some blame the coal lobby but the real money will come from transportation use.
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Permalink Reply by Robert Duke on
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Well, I said I was going to shut up, but... I pretty much agree with your point here. BUT I was somewhat encouraged over the "thumping" certain political forces took in early November - not because it will necessarily result in instantaneous change for the better, but because it put the politicians on notice. This may be, heck, is incredibly naive and idealistic, but I believe that our salvation lies in rooting out special interests and aggressively removing the politicians that they have in their pockets. When the average American can look at a situation and say "voting this way would be better for me, but voting this other way would be better for the country,", at least part of the time, then there is hope. With fragmentation into a bunch of special interests, there is no hope.
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Permalink Reply by Robert Duke on
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I unfortunately don't have time to wax eloquent on this (or maybe fortunately...), but I think this is a great topic! I don't think this is "the" root cause of our economic woes, but it certainly is "a" root cause, and as oil continues to get more expensive if/when the economy recovers, continuiing to rely on oil for transportation can only have a damping effect. Clearly, natural gas is an extremely sane solution to the problem. So this is CLEARLY in the national interest for us to get off our rears and make this happen. SO, the key questions:
1) What are the primary impediments to making a NG transportation economy happen?
2) What are the business forces that would have a conflict-free interest in making a NG transportation economy happen, and what exactly can they do? I actually think that the O&G companies are a bit conflicted - they have a huge investment in oil infrastructure, and as long as people keep buying it, they make money. This is in their financial interest of course, but not in the longterm interest of the country and its people.
3) What can we, as individuals, interested here primarily in salvaging our economy, never mind whether we make a ton of money selling natural gas or not, do to make a NG transport economy happen?
I sometimes ruminate about finding the right things to invest in to get the country headed in the right direction, and right now I don't think it is production - it is in CNG vehicle and other technologies, as well as a restructuring of the regulatory environment through the political process. There must be tremendous opportunity out there for folks with a little cash and a low aversion to risk...
I also think about the issue of the greens. Many of them have their hearts in the right place, but have not done the math on how long it would take, or how much it would really cost, to move to totally renewable energy sources RIGHT NOW. A major effort to work with them, and help them see this as a sane low-pollution transition mechanism, would be a wonderful thing. One reason I got excited about the Bloom Box.
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Permalink Reply by Les Bamburg on -
DJG, maybe if the price of gasoline moves high enough American consumers will finally start buying plug-in hybrid electric and compressed natural gas vehicles. That is the biggest challenge - changing the consumer mindset.
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