We know we have oil in all kinds of places in the US. Alaska, government land in the west, and the Gulf of Mexico all have easy to get at oil. Why aren’t we drilling for them? Companies ($BP, $XON, $COP) would love to go get that oil but are prohibited by federal edicts. Simply doing that would put downward pressure on price because we would be increasing supply.
Additionally, we have found new supplies of natural gas ($NG_F) all over the country, but the EPA is making it awfully tough for companies ($EOG, $CHK, $DVN, $APC) to get at them. Already we are seeing regulations, congressional hearings and left wing media stories on the dangers of fracking. In response to all the new supply, the price of natural gas has screamed lower and stayed there. As much money has been lost on the bullish natural gas trade as the bearish US Treasury bond trade.
When did America build it’s last nuclear power plant? If you said before 1974 you are correct. Nuclear energy is incredibly efficient. It’s also incredibly safe notwithstanding the Japanese events of last year. But, government hasn’t allowed power plants to be built. That constrains the total supply of energy putting upward pressure on gas prices.
If you say that we need to do all this green stuff because of global warming, you have been living under a rock. Global warming has been debunked. If you say we should pursue alternative energy because of pollution, that’s silly logic too. Our air, water and environment have never been cleaner. We might have more trees here in the US now than we did over a century ago.
Government subsidizes a non efficient form of energy, ethanol, and we constrict the use of efficient energy, fossil fuel and nuclear. That’s why we will see $4 per gallon gas. Get a major supply chain disruption, like all out war in the Middle East and you will see gas prices go over $5 per gallon. There just isn’t enough elasticity in the supply chain to prevent it.
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