Recently, there has been a considerable amount of healthy skepticism about the growing energy renaissance here in the US. Those concerns have focused primarily on two areas. The first being the environmental issues that surround horizontal drilling and fracking and the second expressing concerns about the possible “exponential decline rates” on these fracked wells. I have not shied from passing on the concerns so I do feel compelled to pass on those articles expressing more confidence in the recent developments.
This article was first published on NBCNews.com and then reprinted yesterday on CNBC.com. What caught my attention was the quote from Daniel Yergin. Mr. Yergin is the author of The Quest and The Prize – two must read books on the history of oil and natural gas. He is now the vice chairman of the energy consulting company IHS and one of the most respected energy voices in America. Yergin has noted both the consumption and production trends and believes that the U.S. will largely be able to wean itself off non-North American oil sources within a decade. “We'll still be importing some but it's certainly a rebalancing of global oil. That oil that was coming to the United States will go somewhere else and that somewhere else would be Asia."
Yergin notes that what is particularly important for the US economy is the implications of cheap natural gas for the industrial sector. Already significant new investment is taking place in areas in and around the new natural gas plays. “The industry supports 1.7 million jobs, a number that he says could grow to 3 million by 2020.” One of the companies noted is Dow Chemical. “[T]he company's CEO, Andrew Liveris, is outspoken about his belief that cheaper energy can bring manufacturing back to U.S. shores.”
All in all, a very bullish article about the US, its energy sector and its economy. For today, as we process Cyprus, no bearish views here on the energy sector!