Will the energy boom happen all at once? Probably it won't. Instead, it will happen by drips and drabs, and one day, we'll all wake up, look around and maybe say to ourselves, "Gee, things seem better, and business is doing quite well." And then we'll know.
Energy independence isn't what we think. It probably won't have much of an effect when you pull into your c-store or gas station to fill up your tank — even if we are booming like mad. As said in last week's blog, the price of auto fuel is set globally, so think of China, France and even Iceland when you think of a tankful for your U.S. trip. Most of the savings in the price of gasoline will come from higher fuel economy. If fuel economy continues to improve, the price of gasoline may fall slowly, but that gain in supply may be offset by greater demand in China and other developing countries.
To bolster my thesis about gasoline, our friendly neighbor, Canada, has enjoyed energy independence for decades, and yet it pays about the same price for a gallon of gasoline, adjusted for the difference in measure, as citizens here pay. Relatively low or high pump prices notwithstanding, our oil companies, some of the largest businesses in the world, should enjoy a renaissance. Instead of partnering subsidiaries with sheiks in the Gulf states to export oil here, companies will, partnerless, export shale oil from North Dakota, Oklahoma, Pennsylvania, Texas and Arkansas. Did I mention Louisiana? Consider what abundant oil did for the Gulf states, and then consider what it might do for the United States. Maybe down the road — like Native American nations with casinos — our government, when it gets around to allowing shale drilling on public lands, may parcel out the income to citizens and even provide free university educations.
The price of natural gas as a utility fuel for businesses and residences, simultaneously, could have a tremendously positive influence on what happens in our own economy. Cheap fuel can be a catalyst (pun intended; sue me) for manufacturing and retail. Consider that cheaper anything used in business can act as increased capital, providing jobs and new opportunities.
Maybe the politicians and pundits can't see the forest for the trees. Maybe we are so invested in minutiae that we can't see the big picture.
Readers of The Investment Edge know that I'm an amateur drummer and fanatical jazz fan. I am sad to report that Dave Brubeck died last week on the eve of his 92nd birthday. I seem to remember that Dave, at 90, was touring dozens of countries, spreading the gospel of jazz. I was lucky enough to stage crew for his group once, years ago, when the Tulsa Jazz Festival actually had jazz groups and used amateur stage crews. More importantly, I listened to his excellent music for most of my life. There's a Fresh Air podcast at NPR.org, reprised last week, of a 1999 Terry Gross interview with Dave; I recommend it. Dave's music will last forever.
