Monday, September 7, 2009

Will US Energy Prices be More reasonable?

Unlike 2007, we may have more reasonable energy prices moving forward because of natural gas tech improvement and a “gas glut”. This wont last forever, but itll last for a while. This COULD spur the creation of natural gas cars, which would be good.

It won’t affect oil prices (oil is a global commodity, natural gas is much more regional due to transportation constraints), so gasoline prices would still go way up. But it would make electricity prices much easier, which would significantly help reduce inflation, and it would also improve the state of US exports, because I don’t believe the rest of the world has quite the same natural gas resources we do and it's certainly more expensive elsewhere.

Oil and coal will still go up because of international demand, and foreign natural gas may still increase a lot. But the US may see a lot of benefit in terms of the trade deficit, etc, because of our tremendous resources and the incredible improvements in horizontal gas drilling that have already hit 40% of natural gas wells in the US and have given us such an overabundance of natural gas. This would have benefits on US carbon emissions, too, because natural gas emits less than oil or coal.

For more on natural gas, see here.

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