Reenergizing America

Over the weekend, I described Rick Perry's jobs plan as unattainable. I still feel that that is the case. It will take a long time before the job numbers that he mentioned are actually realized, and he will be long out of office when that is the case. However, I do agree with Perry that the energy industry can create jobs:

We can create hundreds of thousands of jobs and increase our oil output by 25 percent if we fully develop oil and gas shale formations in the Northeast, mountain West and Southwest. I also support drilling in Alaska’s Arctic National Wildlife Refuge coastal plain (ANWR), offshore expansion in the Beaufort and Chukchi Seas, and development of the National Petroleum Reserve in Alaska, all of which would maintain the Trans-Alaska Pipeline System. This will create more than 185,000 U.S. jobs.

The numbers are ambitious, at least for the immediate future. In fact, some think the plan would take years to materialize jobs:

"It's not going to be overnight," said David Dismukes, associate executive director for the Center for Energy Studies at Louisiana State University. "These are big capital-oriented investments. People don't turn on a dime with these investments."

There's a lot of potential in energy though:

"I don't know any other industry that can bring this quantity of jobs to the market," she said. "We have the potential that's not being realized and it could be."

With the unemployment rate as high as it is, it makes sense to ease some of the restrictions in order to get some of these industries working. It's not just the drilling and mining that will create jobs, there's a trickle down effect:

With millions of Americans clamoring for employment opportunities, there is no excuse to delay. A study released last month by the Woods Mackenzie research firm found that 1.4 million jobs and $800 billion in new government revenue could be created over the next two decades by removing barriers to increased domestic oil and gas production. These are high-paying jobs, available now, and private industry—not the taxpayer—is making the investment.

The two main political talking points are jobs and balancing the budget. This would help both of those things. By enabling these projects, they can spur industry. It will help construction of plants and drilling sites. It will bring management, it will bring financial support. There's a lot of potential in spurring this industry.

Versus digging up and rebuilding perfectly fine roads, this is a much better solution. This actually creates new jobs that will last, rather than creating new work. This expands an industry that will not only provide jobs, but will also provide tax revenue from these new projects. It's really a no-brainer.

Obama Goes Nuclear

Here's what the President had to say:

"Investing in nuclear energy remains a necessary step," the president said. "And what I hope is that this announcement underscores both our seriousness in meeting the energy challenge—and our willingness to look at this challenge not as a partisan issue, but as a matter far more important than politics."

I'm very excited about this development.

The Solution?

Gas prices are high. And they continue to rise. In my home state of Massachusetts, gas prices have increased substantially:

AAA’s Jan. 4 survey of prices in Massachusetts found self-serve, regular averaging $2.62 per gallon, up three cents from last week. The price is four cents below the national average for self-serve, regular. A year ago at this time the Massachusetts average price was $1.62, a dollar lower than today’s average.

You think three cents in a week in Massachusetts is bad, just look South. In Jacksonville, gas prices rose five cents:

Jacksonville gas prices rose 5 cents over the past week as severe temperatures throughout the country increased demand for crude oil to produce heating oil.

The average price of a gallon of regular gas is $2.65 in metro Jacksonville, $2.68 in Florida and $2.66 nationally, according to AAA Auto Club South.

The increase in the price at the pump is reflective of the price of a barrel of oil. Oil prices continue to progress to highs and the seasonal conditions have not helped either:

Crude oil climbed above $81 a barrel for the first time in two months as freezing weather and improving economic prospects around the world bolstered the outlook for fuel demand.

At the same time, supply is falling:

U.S. heating oil stockpiles have fallen for six weeks to 44.4 million barrels, the longest decline since April 2008, an Energy Department report showed Dec. 30. Supplies of distillate fuel, a category that includes heating oil and diesel, probably fell 2 million barrels last week, according to the median of seven responses in a Bloomberg News survey.

It is only natural that prices would increase from the resulting changes in the market. When economic pressures are present, it leads to new innovation or alternatives to relieve the stress. It's why economics are so central to the way our world works. With oil prices rising, we need a new innovation or an alternative to arise.

So is Oil Shale the solution? What is oil shale you might ask. Oil shale is a source rock that hasn't yet released the oil. We can obtain this oil through processing. Seems simple enough. However, complex engineering and economics have gotten in the way in the development of the industry. But with oil prices as high as they are, it is now feasible to explore ways to produce oil from shale.

Total SA, Europe's third largest oil company, seems to think so:

Total SA, Europe’s third-largest oil company, accelerated its expansion in unconventional energy by agreeing to buy a stake in Chesapeake Energy Corp.’s assets in the biggest U.S. natural-gas field for as much as $2.25 billion.

Here's some information on the Barnet Shale:

The Barnett Shale is the most productive U.S. gas field and accounted for 52 percent of Chesapeake’s third-quarter output. It was the first geological formation where improved technology enabled producers to bore sideways through thousands of feet of rock and fracture it with a mixture of water, sand and chemicals to make gas flow.

So it appears that companies are investing money into the resource. We'll see if it ends up paying dividends. We have only so many resources, and economics dictate whether we can produce something that is of use. Hopefully, oil shale will be a new economically viable resource.