GM, HCM, CLNE, GE, CHK
It is almost universally agreed that the US energy policy is
incoherent and unintelligible.
It is enlightening to learn that the US is both reducing its
Greenhouse-Gas emissions and becoming more energy
It was reported recently that the share of US energy demand
met by domestic sources increased to 81% through the 1st 10
months of Y 2011, the highest level in 20 yrs, and emissions are
expected to decline 12% by Y 2020.
A major factor in both trends is increased use of Nat Gas, a
cleaner-burning fossil fuel now being extracted in abundance
across the US.
Hydraulic fracturing, a new production technology also known
as fracking, has helped push prices for the fuel to a decade low,
and has created lots of good jobs in the process.
To be expected a large lobbying effort has attached itself to
this business, advancing strong visions of an America free of
Middle East Crude Oil, cleansed of carbon pollution and humming
with new Nat Gas-powered vehicles, if Congress provides a few
billion in tax credits to get the industry really up and
Nat Gas has many advantages, which is why the industry does
not need more US government assistance.
Those seeking federal aid argue that the costs of switching to
Nat Gas on a large scale are prohibitive for trucking companies
But, the fact is that trucking companies are buying more
long-haul Nat Gas trucks now because the fuel is cheap.
The annual savings over diesel can add up to $20,000 per
truck, so a company can recoup the extra cost of the new
technology in about 2 yrs.
On the consumer side, Chrysler Group LLC and General Motors
) announced that they plan to build pickups that use compressed
Nat Gas, joining Honda Motor Co.(NYSE:HCM), which sells a version
of the Civic that runs on Nat Gas.
To meet increased demand, companies are building
infrastructure on their own: Clean Energy Fuels Corp.(
), a provider of Nat Gas fuel for transportation, plans to build
70 Liquefied Nat Gas (
) stations by the end of Y 2012.
General Electric Co. (
) and Chesapeake Energy Corp. (
) have tied-up to help make compressed Nat Gas available at more
Honda plans to install fueling stations at some of its
dealerships. Fleets of taxis, trucks and buses across the country
are using the fuel in growing numbers.
So, market forces are working. It is not clear yet what will
be the most efficient means to get Nat Gas to power vehicles, as
many options are on the table. But the private sector is the best
place to experiment.
Billions of dollars in government subsidies will only further
distort the energy sector, threaten to create another industry
reliant on Washington's largesse and drive up prices by
artificially boosting demand. Such support could also crowd out
promising renewable energy sources.
The US Congress for the moment is showing restraint.
On 13 March, legislation providing tax credits for Nat Gas
backed by billionaire investor T. Boone Pickens failed to pass
the Senate. A House version of the bill also looks unlikely to
The issue will come up again, and when it does, the
government's role in encouraging Nat Gas should be modest.
On the supply side, the government should start minimizing
uncertainty about the future of fracking by drawing up a clear
regulatory plan to protect communities without unduly burdening a
Washington should avoid meddling in the Nat Gas industry while
continuing to support research and development for
That means mean taxpayers should not subsidize the Nat Gas for
Vehicles business IMO.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red
Roadmaster's Technical Report on the US Major Market Indices, a
weekly, highly-regarded financial market letter, read by opinion
makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and
stock markets since 1984, following a successful business career
that included investment banking, and market and business
analysis. He is a specialist in equities/commodities, and an
accomplished chart reader who advises technicians with regard to
Major Indices Resistance/Support Levels.