Shale Game

http://www.city-journal.org/2012/eon0108cw.html

***************

"You have to think anyway, so why not think big?" (Donald Trump)

***************

There seems to be some hesitation on the part of folks in New York to participate in the massive "shale boom" going on in the U.S. In the last three years, more than 3,000 gas wells have been drilled in western Pennsylvania's share of the Marcellus shale formation. This, of course, is right next door to New York.

I thought a quote from Donald Trump would be appropriate here since New York is determined to think "small."

According to Clark Welton in his article which I've attached, with more and more producers in the business, the price of natural gas has dropped steadily and the U.S. has become the world's leading producer of natural gas. With a $3 billion budget gap for fiscal year 2013, one would think New York might want to jump into this economic prosperity.

But, no, the environmentalists have pressured governor Cuomo into a "non-commitment." This flies in the face of multiple economic studies that point to billions of dollars in new business activity and tens of thousands of jobs. The Marcellus and Utica formations represent an "extraordinary opportunity" for New York. OK, let me repeat, JOBS.

Last I checked, Robert Redford has an estate in Malibu. He doesn't like the environmental impact of drilling. Nice. Is he going to hire the people in New York who are unemployed?

Setting aside the politics, anybody who's seen "Gasland," the HBO documentary on hydraulic fracturing in Pennsylvania comes away convinced that there are problems. So, New York gets the chance to tell the oil companies what they have to do to drill safely in New York without polluting. The Sate Department studied the Keystone XL pipeline proposal for 3 years and negotiated 59 changes for safety and environmental reasons. All were accepted. New York should do the same but do it in "weeks" instead of years. It's not rocket science.

Wait, there's more. France's Total SA will invest $2.3 billion in Chesapeake Energy Corp. assets to explore the Utica shale formations in Ohio. China Petrochemical Corp. will spend $2.5 billion in a joint venture with Devon Energy to explore shale oil and gas projects in Alabama, Mississippi, and Colorado. These are global energy dollars coming back to the U.S. (Foreign Direct Investment!).

Chesapeake estimates its deal alone could create 25,000 high-paying jobs within the next few years. The drilling boom has created a growing market for businesses that service oil drillers, such as steel-pipe producers.

According to the editors of the Wall Street Journal, "...sooner or later Albany's revenue needs will "trump" (no pun intended) its anticarbon pieties." The WSJ editors go on to say, "If President Obama wants to help his re-election chances, he'll stop wasting tax dollars on losers like Solyndra and "green jobs" and start talking about the brown jobs that are already multiplying in the private economy."

As Welton points out in the article attached, MIT issued a report on fracking that found "the environmental impacts of shale development challenging but manageable..." Gas can replace oil fired and coal fired power plants. It burns cleaner. What's the question?

***************

Closer to home, the folks at California-based Clear Capital have projected that home prices in Dallas will rise by 5.8% in 2012. According to them,the DFW area will be among the Top 10 home price gainers this year. About half of the 50 major U.S. cities in the Clear Capital forecast are expected to have price gains this year.

Clear Capital estimates that, in the fourth quarter of 2011, more than 28% of the homes for sale in North Texas were previously foreclosed properties. But, these properties have to be dealt with before the overall housing market can get healthy again.