Washington Post article: "Should the U.S. have a soveriegn natural gas wealth fund"

In this month’s Wonkblog Crowdsourced discussion of how cheaper natural gas will affect the U.S. economy and business, reader “imersion” has a provocative idea about some of the less obvious possible consequences of the more plentiful shale gas obtained through hydraulic fracturing. The ripples, “imersion” argues, will flow through to a range of industries, buying time for the solar industry and battery makers to get their technologies working better as home heating and autos rely more on natural gas for the time being. Could the U.S. make so much money from the stuff that the nation needs to find something to do with it, much as Norway does with its oil supplies? Well, that’s a different question.

Here’s “imersion”:

World natural gas prices are around $11 or $12 while US natural gas is at 3.67 USD/MMBtu for Jun 2013. That is a whopping big difference and the biggest reason that many energy intensive industries are quickly re-establishing US branches (e.g. Lenovo computers). Exporters are rushing to begin to make hay but the overwhelming supply produced by fracking will make little dent into this price divergence. While fracking technology is applicable anywhere in the world, the rest of the world simply does not have the enormous drilling resources of the US to implement it, so again this divergence will converge only slowly, much more slowly than manufacturing in the US will ramp up. . . .

Electrical power plants will switch to lower pollution gas. This will give solar energy industry time to improve their technologies. Cars will use gas. This will give battery makers a breathing spell to improve batteries for rechargeable cars. Offsetting energy will drive oil prices down and permit oil to be used for more productive things like plastics, fertilizer, and stuff. Home heating systems will become predominantly gas driven, saving homeowners money they can use for other purposes, charging the economy. . . .

The soaring stock market will create pressures for a US Sovereign Fund based on natural gas (like Norway’s sovereign oil fund) to share the wealth among all Americans.

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Permalink Reply by Inchworm antenna on August 10, 2013 at 4:26am

we do.  It's called the energy or utility assistance program.

Permalink Reply by fandango on August 10, 2013 at 5:23am
Permalink Reply by gary smith on August 10, 2013 at 12:44pm

thanks for posting the link. i have never stopped to learn how to do that.

Permalink Reply by fandango on August 10, 2013 at 1:32pm

You're welcome :)

(Just Copy a link and Paste into the Reply box.)

Permalink Reply by Jim Litwinowicz on August 10, 2013 at 2:18pm

This a poorly thought out, knee jerk idea by the money grabbers in our country that have no understanding of the industry or economics. To compare Noway to the US is about as useful as comparing me to Pamela Anderson.

First the US is one of the very few places where the mineral rights on private land are owned by the surface owner.  In m0st countries, the rights are owned by the government and so the government can have a sovereign fund. . Additionally, the US is a much larger country with a huge population and is severely in debt. 

While oil and gas from offshore and federal lands does generate royalties to the federal government, it will not be enough to offset the federal debt. Especially with Obama and other progressives doing everything they can to inhibit such production and protect their favored industries of solar and wind.

This is just a way to implement a national severance tax so the liberals can spend it buying more votes.

Permalink Reply by Mark McGrail on August 10, 2013 at 5:19pm

Great points Jim, and as inchworm stated energy wealth is already redistributed through the enrgy assistance programs.

Permalink Reply by jason smith on August 10, 2013 at 7:34pm
The liberals are always generous with other peoples money especially when they buy votes with all those free phones.

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