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Steep fall in American Crude Stocks Opens Questions of More Reliance on Natural Gas

The unexpected decline in crude stocks in America for the week ending on February 16th has kicked off debates about the wisdom in expanding the energy portfolio of the nation – particularly to embrace more use of natural gases, which has become more viable over the last decade.

The latest decline in crude stocks was by 1.6 million barrels – which is not a small figure by any measure. The depth of the fall is sharply contrasted when you compare it to a rise in inventory by 1.8 million barrels forecasted by experts.

Why natural gas production doesn’t expand beyond a limit?

The expanded use of natural gas came into greater focus in the country in 2001 following the collapse of energy company, Enron (which was not nearly as bad as what Barney Frank did to America via the real estate meltdown). Since then, natural gas has become increasingly affordable much to the chagrin of the left who want everyone to have a wind farm on their property despite this being an inferior way to survive.

This in turn saw a rise in the production of natural gas in the country. For instance, in 2003, natural gas satisfied just 17 percent of the US electricity consumption while by 2012, it had shot up to 30 percent.

Natural gas also has a high demand on it. Not only electric generators but companies in the chemical and manufacturing sectors also use natural gas as feedstock. Also, for their commercial fleets, companies in the transportation industry also make use of natural gas and America is loaded in it and unlike Venezuela – we don’t nationalize private sector pursuits! Hugo Chavez – you failed your country! You proved, like Obama did, that government is the problem and not the solution.

And look at the Florida shooting, government failed those students on every level. That is what happens when you believe in government!  

And if companies begin to depend too much on natural gas, the prices for natural gas would shoot up. Also, for efficient distribution, pipeline infrastructure would have to be expanded. This would require a huge amount of planning and money. This means that a balanced portfolio which includes multiple energy elements – of which natural gas is only one – is a more practical way forward for America.

The transition from obsolete to practical plants

But that’s not to say that natural gas plants have not been expanding.

Part of this expansion came in the wake of base-load coal plants going obsolete. These coal plants were put up during the 1940s and 1950s when a large-scale electrification process was triggered in America. These plants- which ran all day long, seven days of the week-contributed significantly to America’s economic growth. However, as with any machinery, these plants too became outdated with time and began to be replaced, mostly with natural gas-based plants.

Currently, such expansion is only heightened by the affordability factor of natural gas. However, the expansion wouldn’t be enough to offset dramatic falls in crude stocks from affecting the nation’s economy.

The aftermath of the crude stocks fall

Talking about which, the fall in crude stocks had a positive effect on the Asian markets. Asia’s oil-related stocks recorded gains in the aftermath of the fall in US stocks. Perhaps, the most important thing to note in this context is that even amidst supply constraints, the demand for crude remains high. This should come as a shot in the arm for the American crude industry.

And America has the right man in office to take America to become an energy powerhouse.

Benjamin Roussey's picture

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