A Pat On The Back, For Shale Investors

The last time I wrote an email this amusing was a little over a year ago, just after President Obama’s 2012 State of the Union address.

There was something I had to get off my chest. In particular, President Obama appeared to be taking credit for the revival of U.S. energy.

Whaaaaa? Is he really standing up on the podium – amidst incessant applause — and actually saying he’s responsible for this energy breakthrough? Wow, what a crock, I thought to myself.

Today let’s cover the next amusing story coming from America’s shale energy patch. As you’ll see, another set of government officials are taking a page out of Obama’s book…

I really did laugh out loud back in 2012. Here’s what the president had to say:

“American oil production is the highest that it’s been in eight years. That’s right, eight years. Not only that, last year, we relied less on foreign oil than in any of the past 16 years. (Applause)”

“We have a supply of natural gas that can last America nearly 100 years and my administration will take every possible action to safely develop this energy. (Applause)”

Incidentally, I may add, the president failed to give credit to anybody in the oil and gas industry. In Obama’s eyes, the pioneers of the industry must have been pawns in the government’s giant game of chess – you know, the one that keeps us all safe, healthy and happy?

Ugh, what a joke. As I’ve written before in these pages Obama hasn’t done much to help the oil and gas industry in America. Fact is, his actions in large have had the opposite effect.

Today, America’s shale industry, as was reiterated to me at a conference in Oklahoma’s oil country this week, is still as unstoppable as ever.

As the broken record (that is, your editor) spins, oil and gas production in the U.S. is booming. According to recent data, since 2008, U.S. crude oil production is up 37% and natural gas production recently hit an all-time high.

This newfound production is the result of a decade’s worth of technology breakthroughs (horizontal drilling, hydraulic fracturing and 3D seismic.) Today oil and gas companies are able to produce previously trapped “shale” oil and gas — and by the looks of things we can expect to see production boom for decades to come. No thanks to Obama or any other government official.

This “shale stimulus plan” as I’ve called it before is benefiting every American. It’s an economic shot in the arm for America’s economy and at the same time it’s helping to lower your cost for gasoline (via domestic crude) and electricity (via domestic natural gas.)

But today on this feel-good Friday, I want to share with you the next benefit of shale’s unstoppable legacy. Something, by the way, that the government is likely to take credit for!

Shale’s Next Victory: Lowered Air Pollution

According to the most recent data from the U.S. Energy Information Agency, carbon dioxide emissions peaked in 2007. At first glance you may attribute this pollution peak to the economic meltdown of 2008. But a closer look reveals that carbon dioxide emissions have been down-trending every year since 2008, even in the midst of an economic recovery. As it stands C02 emissions are at a 20-year low.

Sure, more efficient vehicle engines and power plant upgrades have made an impact – but it’s undeniable that the major factor since 2007 is the transition from coal-fired power to cleaner burning natural gas.

With cheap natural gas replacing coal, pollution is receding. Indeed, it’s no coincidence that this ebb in air pollution occurred ever since the shale boom’s modest beginning around 2007.

And when you add up the numbers since 2007’s peak, you’ll see that the drop-off in coal use accounts for more than 50% of the reduction of total C02 emissions – and yes, naysayers, that includes the added emissions from increased natural gas use.

We’re also seeing the same drop in other air pollutants like sulfur dioxide (Sox) and nitrogen oxides (Nox.) Can’t beat that!

Put simply, since 2007 the predominant reason we’re seeing better air quality is due to a switch to shale gas – no government mandates or presidential approval needed. It’s free-market serendipity – a drop in emissions due to cleaner-burning, cheap and abundant natural gas.

Sure, Obama may take credit for it, or the EPA (and don’t get me wrong – the Clean Air Act has been a prime force in making sure U.S. air quality is better since the 60’s) but the major factor of late has been our good friend shale.

So next time that dummy in your neighborhood with the “ban fracking” bumper sticker starts yapping at the local picnic, you can rest assure that the new, abundant, shale gas is making a huge, beneficial impact in pollution abatement.

Hehe, and good luck to the guy that raises his hand at the Sierra Club meeting to inform the crowd that “fracking” may actually have helped our air quality.

At any rate – I’ve had a lot of questions fly through the wires to the extent of “I don’t want to invest in shale if fracking is harming the environment.” Well today we’ve got more proof on our side. As I said, this is a feel-good Friday!

Not only has there NEVER been a reported case of ground-water pollution from fracking – today there’s irrefutable evidence that cleaner burning natural gas can have a positive impact on our air quality.

The same trend will also lead to some fantastic profit opportunities, too – as I’ll share with you early next week.

In the meantime, enjoy the fresh air and your weekend.