Note to Congress: America’s Energy Solution Is Right Here
by David Fessler, Energy and Infrastructure Expert
Friday, February 26, 2010: Issue #1205
A round of applause for the U.S. Congress.
In just one month, the bumbling bureaucrats have managed an impressive feat: From a 61% rating last month, voter unhappiness has now hit a record-high 71%, according to Rasmussen Reports.
That probably isn’t surprising to the majority of Americans. Most view Congress as inept, driven by the belief that politicians’ main goal is just to get re-elected. To wit: The Center for Responsive Politics says the 2010 battle for Congressional seats will cost $3.7 billion. Not exactly what our forefathers had in mind.
If only our politicians could actually accomplish something meaningful.
The 19-state Western Governors’ Association (WGA) shares that frustration. It penned a letter to Congress on February 11, in which it urges politicians to pass significant energy legislation.
And it has one energy resource in mind…
Natural Gas: America’s Domestic Energy Solution?
Here’s the last paragraph of WGA’s letter to Congress:
“The use of natural gas as a transportation fuel is a domestic solution to a variety of critical issues. Ninety-eight percent of the natural gas we consume is produced right here in North America. Additionally, natural gas is a cleaner, more affordable fuel for Americans. Natural gas produces approximately 25% fewer greenhouse gas emissions and significantly fewer criteria air pollutants, and fueling natural gas-powered vehicles (NGVs) costs a third less than traditional gasoline. Incentivizing the further build-out of NGV technologies will stop billions of dollars in overseas oil payments, create thousands of jobs, reduce harmful greenhouse gas and criteria air pollutant emissions, and improve the overall health of the United States’ economy.”
Job creation, reducing our dependence on foreign oil, improving America’s balance sheet. What’s not to like?
In a capitalist society and the race for profits… plenty.
America Shoots… And Hits Itself In the Foot
Forget global warming, or greenhouse emissions. America is fighting another battle. Against itself.
While natural gas seems like a slam-dunk idea, the coal industry views it as a huge threat. And with “big coal” profits hinging on whatever legislation is passed, Congressional members from the big coal-producing states are looking after their best interests.
So what should be no-brainer legislation has turned into a messy pot-pourri of environment, business, science – and of course, politics.
Aubrey McClendon, CEO of major natural gas producer Chesapeake Energy Corporation (NYSE: CHK) states: “Never in my life have I been confronted with something so obviously easy and good to do and have such Congressional apathy.”
However, just replacing coal with natural gas isn’t necessarily the answer either.
David Hawkins, a climate change expert at the Natural Resources Defense Council says: “A coal plant with carbon capture and storage is a cleaner plant than an uncontrolled natural gas plant.”
True. But carbon capture is still in the experimental stages, and its long-term viability is still in question.
So where to from here?
All parties should be able to agree on this: Cars burning American-produced natural gas are better than burning foreign oil. And switching to natural gas gives scientists time to test the commercial viability of carbon capture.
Especially since we’ve got so much of the darn stuff…
America Has the World’s Biggest Natural Gas Reserves – And This Firm Is Leading the Way
It would be a real shame to cave in to the coal and oil lobbies and under-use the greatest natural gas resource on the planet, right here in America. We’ve got 100 years worth of supplies.
Designing cars that run on natural gas costs no more than designing them to run on gasoline. And consumers would notice a difference in their bank accounts, too, since fueling up with natural gas costs about a third of the price for gasoline.
The good news is that Congress will eventually reach a compromise (probably later this year) with both coal and natural gas interests and pass some form of legislation.
When it comes to the natural gas industry, there are several major publicly traded companies. One is the afore-mentioned Chesapeake Energy, but another firm with a big role is Clean Energy Fuels Corporation (Nasdaq: CLNE).
Right now, it’s primarily focused on its fleet of 300-plus customers, which operate around 15,000 natural gas vehicles in the service sector. That includes public transportation such as airport transit, seaports and taxis. Clean Energy also supplies fuel for the trucking and trash haulage industries.
But when natural gas legislation is passed, the firm’s reach will likely multiply. It’s already a natural gas supplier and operates around 200 fuel stations. It’s a virtual lock to be at the forefront of the fuel station build-out on a wider scale.
Mammoth energy sector players like Exxon Mobil Corporation (NYSE: XOM) and Chevron Corporation (NYSE: CVN) are also likely to participate – firms that have the money to upgrade their existing fuel stations to accommodate natural gas vehicles, too.
The key to progress, though, will be Congress. If politicians can actually pass meaningful natural gas legislation, it will bode well for firms like Clean Energy.
Good investing,
Dave Fessler
P.S. Given the constant quest for re-election in Congress, it’s no wonder that the legislative process is slow. However, there are two bills currently circulating the chambers:
- H.R. 1835: Introduced last April by the House, it proposes generous tax incentives to both manufacturers and buyers of natural gas vehicles. These credits last up to 10 years. The bill also provides huge tax credits to companies that install natural gas fuel stations – up to $100,000 per station.
- S.1408: This Senate bill is similar to that of HR 1835, but is a little friendlier to natural gas – at least as a transitional fuel to alternative energy.
To keep up with all the latest developments in the energy and infrastructure sectors, check out my “Hot Stacked” column in The Oxford Club’s Communiqué. Each month, I report on the most important trends and companies best-placed to profit from crucial projects. Find out more about how to become an Oxford Club member.
- Global Warming: How to Profit From Greenhouse Gas Emission Restrictions & Incentives
- My Plan for Eliminating America’s Dependence on Foreign Oil
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15 Responses to “Note to Congress: America’s Energy Solution Is Right Here”
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David Fessler is an Advisory Panelist for Investment U and The Oxford Club, one of the world’s most exclusive and prestigious networks of private investors.
February 26th, 2010 at 1:59 pm
Using LNG is also environmentally friendly from a spill point of view. Ground and water contamination effect is nothing compared to OIL. Consumers and Eco systems both would benefit from NGV’s.
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February 26th, 2010 at 2:28 pm
In response to “America’s Energy Solution is Right Here”….the film “Gaslands” shows what unscrupulous energy companies have done to unsuspecting communities who now have natural gas running from their faucets at home, who can actually set small streams on fire that run in backwoods areas. The damage done already to our water supplies is incalculable.
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February 26th, 2010 at 2:41 pm
Great article!!
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February 26th, 2010 at 3:11 pm
Thomas Paine would say it’s common sense to go with natural gas.
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BCS Reply:
February 27th, 2010 at 11:36 am
1. LETS AT LEAST START WITH TRUCKS AND BUSES.
2. Doesn’t Phoenix already require Taxis to use NG?
3. refueling is a big bottleneck. Is Clean energy fuels the only one with a solution?
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February 26th, 2010 at 6:48 pm
Did you see 60 Minutes on Sunday 2/21/10 at 7:00 PM EST. This company produces a fuel cell that produces electricity and is packaged in small square components that you can use in homes, cars, factories… just about anywhere depending on your needs. This would put Electric Utilities out of business. The company is presently selling units to large companies who want to cut their electrical costs and generate their own electrical source. It would cost a homeowner approximately $3000.00 (a one time cost) to run his home for 50 years and possibly many more years.
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February 26th, 2010 at 7:02 pm
Everyone is so concentrated in thinking about oil used in vehicles, that another major use of oil is simply being overlooked. Heating, particularly in the Northeast. The City of New York is far ahead of any one else in attempting to address the fact that thousands of buildings in New York City are heated by No 6 oil. That’s the gunky lowest quality stuff at the bottom of the barrel (or barge). The City is proposing that all existing commercial and residential buildings switch to either No 2 or natural gas over some number of years.
No 2 is the same grade of oil used in private homes, and is identical to diesel oil used in vehicles, The difference between the two uses is that home heating oil has dye in it to prevent its use in vehicles to avoid the much higher taxes for vehicle use.
The problem that No 3 is still oil. Allowing such a switch, while having beneficial environmental effects is not nearly as good as natural gas, and it’s still oil, meaning its use does nothing to relive our dependence on foreign oil.
Everything you say about the abundance of natural gas is true, except for a key factor you’ve missed.
The market price of natural gas delivered is close to that of No 6 and is manipulated by the gas pipeline transmission companies, which have monopoly control over the movement of natural gas from where it is to where it’s needed and consumed. While the local utility company (Con Ed in the case of New York City) is a state regulated public utility, there is no regulation of the gas pipeline transmission companies which are in interstate commerce. The only place they can be regulated is at the federal level. At this very time, we’re so afloat with natural gas that it’s costing the likes of a Chesapeake Oil more to get the gas out of the ground than what they’re able to sell it for, precisely why they’ve cut back production.
The gas pipeline transmissionn companies are able to charge what the traffic will bear, are great dividend investments.
But they have an incredible short sighted and stupid business model.
The cost of natural gas delivered should probably be at least 20-25% less than it is. If that were teh case, every residential and commercial building in New York City would have an enormous economic incentive to switch to natural gas for heating as fast as they can.
Everyone would benefit, including both the gas producers and the gas pipeline transmission companies.
Just on the enormously increased demand.
I am personally involved in trying to get this matter to the attention of the appropirate people in Washington. I believe if it goes across the President’s desk, it can happen almost immediately unless some inefficient study group is set up to beat the thing back and forth for the next umpteen years.
The use of natural gas for heating multi-family residential and commercial office buildings in New York City and in every other city in the Northeast (and elsewhere) is a straightforward no-brainer if the economic incentives are put in place.
Norm Weil
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February 26th, 2010 at 7:13 pm
I made a couple of typos. I hope they won’t confuse any one. A personal note. I am personally in charge of a 115-unit residental apartment house in New Yor City.
I’ve been doing this for nearly 30 years.
We last year spent $100,000 to heat this building.
Years ago, it might have cost only $20,000.
25 years ago we installed a burner capable of burning either No 6 or natural gas. We also investigated the cost of run gas service from the street to the burner, a distance then of less than 150 feet. Today the distance is only about 75 feet because of the installation of a new major gas line directly in front of the building.
It would have cost us $50,000 to install a gas line 25 years ago, and natural gas was clearly much more expensive than oil at the time.
Even if it cost $100,000 today to run the 75 foot line from the street to the, we’d do it in a heartbeat if the price of natural gas would only be $75-80,000 per year to heat the building. It’s clear that the price of oil is going to increase over the long term.
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And based upon the way the gas pipeline transmission companies have been running their business, they’ll in increas the cost of natural gas delivered in lock step with increases in oil prices.
Incredibly stupid. If they lower their prices (or are forced to do so through federal regulation), market demand for natural gas will absolutely soar. They’re no need for any new technology as in the case for vehicles, or for modifications of gas stations to enable drivers to fill their tanks with natural gas.
The gas lines are already in place in almost all major cities.
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February 26th, 2010 at 8:19 pm
There is no shortage of oil either. We have not even surveyed the continental shelf. Then there is the baken basin in North Dakota. Alaska has not been fully explored, and neither has the Gulf of Mexico. Proven reserves refer to oil fields currently under production at current technology with oil at a certain price.It is ludicrous to even think that the US (the third largest country in the world with a continental shelf that adds a third more area) possesses only 3% of the worlds oil.
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February 26th, 2010 at 10:43 pm
100 years worth of natural gas, is at our present useage. If natural gas was greatly expanded, it could easyly bring that down to 50 years. It would be wiser to use natural gas as the bridge to new sources of energy. I heard of a new development in fuel cells that in 50 years could replace the power grid. We need to keep our focus on new technology.
Glen
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February 27th, 2010 at 10:04 am
We’re going to be using fossil fuels (oil, natural gas, coal) for at least another 25 years. Utilizing the least offensive and damaging of them is obviously the best choice.
Wind, solar and fission (using uranium) can’t ramp up quickly enough because of their NIMBY resistance, their requisite distance from users, and the unreliability of production. Thorium reactors have the greatest potential for reliable, safe, and proximate energy production. Natural gas is fine in the short term, but nuclear energy production with a thorium fuel is the logical best choice based on current knowledge. No dangerous waste, no threat of terrorist activities, no danger of meltdown, low space requirements, low capital costs, fuel costs of ~$10,000 per year for a 1 gigawatt plant (urananium costs ~$60,000,000 per year), fuel availability in the US 1,000 years or more, no air pollution, no water pollution, nearly free energy talk about a no-brainer.
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March 7th, 2010 at 4:44 pm
Great article and I’m with you but the only way this will ever get done is if people who support the Nat Gas Act take the time to reach out to members of Congress and pressure them to take action. We need people like you to get the information out there with the caveat that we’re all responsible for effecting positive change. You need to ask people to write or call their representatives. Thank you.
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March 8th, 2010 at 7:17 pm
The current administration supports coal–I belive foe purely political reasons–(making the unions happy). we need to impress on our elected officials–that their constuiants are getting fed up with their politically motivated initicatives are no longer acceptable-THEY need to do whats right for our country. They need to push natural gas –fast and now!
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April 4th, 2010 at 5:17 am
i icompletly agree with natural gas back in 1968 when i left u.s.a to go back in belgium afterfive year spend in usa i took my olsmobile cutlass with me and by ading few component did transform that car just by the use of a switch to use ether oil or lpg i belive the same thing could be done actualy with the existing motor to run on naturalgas.i am living now in france and believe it or not the best seling car now is a small renaud car made in romania selling for around 6000 euros and using lpg you peaple are rigth to pusch for the use of natural gas. here is my mail if any body liketo have somme more info.
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June 18th, 2010 at 11:41 pm
I, in Canada, discovered the technology of the Flying Saucer in 1967 and patented it many years later.
A Flying Saucer does not use oil or nuclear power.
It “taps” energy out of the aether.
With only four watts of power, I attacted a lightning strike out of the blue sky.
I believe, that Tesla used it to power his Pierce Arrow Car in 1931.
Pierpont Morgan took a ride with him and asked: “Where is the meter?”
Tesla did not know what to say. He did not patent it as he, as well as Morgan, investor of the Niagara Falls Power Plant, realized that it could be used to power homes.
The units will be installed by electricians and leased only.
That way investors and the taxman will get their due.
The system can also be used to power any type of vehicle, even Shuttles.
That was rejected by the Nasa Propulsion Engineers, as they would become obsolete.
A Shuttle might take off like an airplane and fly to the ISS in one hour, using a constant acceleration of ONE G, or to the Moon in a couple of hours and to Mars inside 24 hours.
The Shuttles would have been able to fly very economically for another ten years.
That little spin-off to power homes and cars would be worth a little bit more than the Space Application, which the Hudson Institute had evaluated at $600 Billion, if the USA would have it before Russia.
After the Space Disasters the Propulsion Engineers at the Glenn Research Centre in Cleveland, Ohio, decided to experiment with it, did not contact me for advice and caused another disaster: the Big Black-out of 2004.
Then Nasa decided that rockets were the only way to fly.
Since I found over 1000 spinoffs from the original invention I will have to set up a well funded company.
Now that Nasa is told to commit suicide by the new Management, the Space Application may be sold to Russia or India, as they have already realized that a rocket is not the way to go to Deep Space.
Any advice is welcome. Nasa certainly needs it.
Regards, JH
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