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Thursday, April 14, 2005
More Oil and Gas

Crude futures slipped below $50 a barrel this morning for the first time since February.

Impact of increased demand for natural gas -

As you may know, natural gas prices have skyrocketed in recent years. Most of the price increase stems from an increase in demand stemming from Clean Air Act standards that have favored natural gas as a clean fuel. This coupled with other factors such as huge demand increases in China and other developing nations, have led to a tripling in the price of natural gas.

The huge price increases not only affect homeowners, but to a greater degree manufacturers and agricultural groups. Manufacturing consumes about one-third of the natural gas consumed in the U.S. Industry relies heavily on "clean" natural gas to meet newer more stringent Clean Air Act standards to fuel boilers and run other manufacturing processes. Natural gas is also a primary, key component of fertilizers. In addition, the production of raw materials and chemicals used by manufacturing and industry to make finished goods utilizes a tremendous amount of natural gas. Trade press reports indicate that the chemical industry in the U.S. alone has lost 90,000 jobs over the past two years. The chemical industry has fallen from a trade surplus of $70.5 billion in 1999 to a trade deficit of $10 billion in 2003. The same reports state that energy prices are cheaper in Europe where nuclear energy in widely used and as a result chemical companies are moving factories overseas.

Clearly my offer to begin drilling in my back yard has had an effect on the oil markets.

Just call me TIBS Greenspan.
Cheers to T.I.B.S.!

Its all about sending a message to the market....
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