Commentary

A Domestic Energy Boom?

By Bill Hobbs | August 23, 2012 | 11:41am EDT

Romney and Ryan are saying that increased domestic energy production will be a foundation of their economic policy, and will fuel - pardon the pun - their American job-creating machine.

Are they nuts?

No, not really.

Despite the policies of the current administration that have been hostile to the oil and gas industry, market forces and technology have combined to create a bit of an American energy boom, and it’s already creating thousands of jobs. And that could be just the beginning.

Stephen Taylor, chairman and CEO of Taylor Asset Management, a Chicago-based investment management firm, tells BusinessInsider.com that "the U.S. may see a reemergence of the petrochemical industry."

Taylor points to the fantastic growth of domestic natural gas product from the Marcellus Shale formation, located in parts of New York, Pennsylvania, West Virginia and Ohio, and notes that Royal Dutch Shell recently announced it would build a massive new petrochemical refinery north of Pittsburgh to use natural gas from the Marcellus Shale.

The Marcellus Shale has attracted a rush of major oil companies, and they have drilled almost 5,000 new wells in the last five years. Drillers have also started to tap the adjacent, deeper Utica Shale formation. Shell's new "ethane cracker" petrochemical refinery would convert natural gas liquids into other, more profitable chemicals, which then go into everything from plastics to tires to antifreeze.

The refinery is expected to create 10,000 construction jobs, according to a Shell estimate. A study by the American Chemistry Council said the plant would create 10,000 permanent jobs in chemical and supplier industries. Shell says it expects the refinery will attract a wide range of industry and suppliers to locate nearby.

To hear Taylor describe it, the United States is on the cusp of an energy industry economic boom - and he flatly rejects the "peak oil" and "peak gas" theory pushed by some who support a political agenda of favoring "alternative" and "green" energy:

BusinessInsider.com: "At this rate, it doesn't seem like projections about peak oil have much resonance."

Taylor: "Frankly I think peak oil is baloney, and you can quote me on that. The potential reserves, especially on the natural gas side, are just tremendous. I was just reading a report that, even in a place like Argentina, shale gas reserves could be north of 700 trillion cubic feet. That could be another huge gas-producing region. There's plenty out there. I don't buy peak oil or gas."

People who doubt the Romney/Ryan claim that increased domestic energy production can fuel faster job creation need only look at what's happening in western Pennsylvania to know that they're right.

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