To calculate the economic benefits that are being generated from America’s vast energy resources, Merrill-Lynch introduces the concept of “energy carry” in its report, defined as an estimate of the daily dollar value of the improvement in our energy balances, including “the natural gas advantage of the U.S. economy relative to Europe or East Asia, the growing revenues from increased exports of fuels, and the reduced crude oil import bill.”Interestingly, for those who have been reading the RBN Energy articles on natural gas this past year, this is not news; it is just confirmation that RBN Energy had it right and was posting their observations earlier than others, and in a language that even I could understand. (Seriously: two years ago I did not understand natural gas, and in fact, and in early posts at my blog, I stated I would not be following natural gas because a) it did not interest me; b) it was a bit player on the Bakken scene: and, c) I did not understand the industry. That has all changed -- a big "thank you" to RBN Energy.
By that measure, America’s “energy carry” was $900 million per day in April, and the energy benefits to the economy will reach $1 billion per day by the end of the year. Merrill Lynch estimates that the daily “energy carry” in January 2010 was only $70 million per day, so the daily economic benefits of energy to the U.S. economy increased dramatically by a factor of more than 12 times in just a little over two years.
The biggest economic benefit from domestic energy production is coming from the growing abundance of America’s cheap shale gas ($3.10 per million BTUs), which is now saving U.S. companies and consumers $566 million per day compared to the $11.64 global average price. The economic benefits from our growing domestic energy supplies are becoming so significant that they now represent about 2.2% of America’s $15.5 trillion of GDP, according to Merrill-Lynch, and that huge boost to the nation’ economy might be enough to keep the U.S. from falling into another recession.
But I digress. Two things that strike me about the Merrill Lynch study on natural gas.
First, all this good news regarding natural gas in the United States, and we haven't even begun to see its full potential. We might be starting to see natural gas corridors in the western United States for long-haul truckers.
Second: the US has its economic problems. (Seniors will be in for a shock when they see their Medicare premiums more than double in 2014, but that's another story for another time.) But, compared to the EU, the US looks pretty darn good. On top of everything else, the EU is paying a lot of money a) for high-priced OPEC oil and gas (France bans fracking); and, b) for really bad investment decisions in wind and solar. Just ask Spain how much they like wind and solar now. The US is paying dirt-cheap prices for oil and gas and fortunately companies like Solyndra cut their losses relatively early by filing for bankruptcy.