Obama nods to natural gas, but fails to give credit

Giving Credit where Credit is Due

I have to give Obama credit for making the shale gas and oil revolution part of his State of the Union Address. Yet at the same time, I fail to understand why he wants to take credit for it as opposed to giving the credit where it is deserved and that is with the US energy industry. Indeed, the President was right when he said, "Nowhere is the promise of innovation greater than in American made energy. Over the last three years, we’ve opened millions of new acres for oil and gas exploration, and tonight, I’m directing my Administration to open more than 75 percent of our potential offshore oil and gas resources. Right now, American oil production is the highest that it’s been in eight years. That’s right — eight years. Not only that, last year we relied less on foreign oil than in any of the past sixteen years. But with only 2 percent of the world’s oil reserves, oil isn’t enough. This country needs an all-out, all-of-the-above strategy that develops every available source of American energy — a strategy that’s cleaner, cheaper, and full of new jobs. We have a supply of natural gas that can last America nearly one hundred years, and my Administration will take every possible action to safely develop this energy. Experts believe this will support more than 600,000 jobs by the end of the decade. And I’m requiring all companies that drill for gas on public lands to disclose the chemicals they use. America will develop this resource without putting the health and safety of our citizens at risk."

Yet then he tried to take credit for the work of others when he said, "it was public research dollars, over the course of thirty years that helped develop the technologies to extract all this natural gas out of shale rock — reminding us that government support is critical in helping businesses get new energy ideas off the ground." Really? Perhaps the President needs a little history lesson. While I agree that at times perhaps government support might be helpful for some projects for this revolution, it definitely was not. It was the great minds in the energy industry inspired by high prices and declining supply decided to think outside the box and use ingenuity to come up with a better mousetrap. It was George Phydias Mitchell of Mitchell Energy and Development Corporation and his vision in the 1980s and 1990s that made deep Shale Gas production a commercial reality. It was companies like Encana Oil & Gas that was trying to figure out how to drill for the natural gas beneath a beautiful and narrow box canyon and decided to drill over 50 wells directionally from one well pad of just 4.6 acres opening up over 640 acres of underground oil and gas deposits without destroying the view.

These ideas were not government ideas but ideas in the private sector. Now while it is possible that the oil companies may have taken some tax breaks on the research and development side, the truth is it was not government but the private sector that is to be congratulated on this historic achievement.

You see fracturing and directional drilling is the key and yet Obama has not really come out in favor of it. Reuters News reports, "The administration's views on fracturing and drilling generally remain ambiguous. The president has yet to offer a clear endorsement of the technology or offer much leadership on the issue. His party on Capitol Hill remains concerned about the environmental impacts (on local communities and global emissions). Large sections of the Democratic party and its support base continue to push for restrictions, stricter regulation or outright bans on fracking."

Yet at the same time the President said, "The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy." Yet he is also calling to kill tax breaks for the energy industry, the one industry that could transform our economy and help our national security. To try to make the case that tax breaks helped create our success and now he is taking it away shows how confused he is on this issue.

The truth is that this President has been presented the greatest gift of any President in modern history and I give him credit for finally realizing it. It is about time.

Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at pflynn@pfgbest.com.

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.


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