Our horrifying natural gas scenario

A once-in-a-lifetime opportunity to change our nation's fortunes is passing us by as Congress ignores an abundant domestic fuel source.

By Jim Cramer Mar 29, 2012 12:22PM

The natural gas collapse is happening too fast.

 

It is beginning to wreak havoc on the economy because there's such a dramatic ratcheting back of drilling at the same time that we haven't been able to harness the fuel in any way to bring down gasoline prices or compete against OPEC oil.

 

Sure, the EPA issued regulations that are absolutely pro-natural gas when it comes to the building of new power plants. That's by default, though, because coal is so terrible for the skies. The EPA is following a court mandate so it can be excused for its timing, even as it will most likely lead to a new step down in that industry's business.

 

The coal industry doesn't hire a lot of people, and a decline in coal of dramatic proportions as utilities switch to cheap natural gas isn't necessarily crushing to the U.S. economy. But unless we officially, as a nation, declare natural gas as the bridge fuel and not just part of a solar/wind mix, we will soon be causing an industry that's been responsible for a huge number of jobs to hit the wall.

 

I have long been a champion of this cleaner, abundant, cheap domestic fuel because it would allow us to smash OPEC and bring gasoline down within the foreseeable future. We know that trucks are responsible for 25% of our imported oil, and it is turned into dirty diesel. We know that trains use a huge amount of natural gas.

 

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We also know that there are natural gas truck engines that have a relatively quick payback. But we do not have enough natural gas stations, even as Clean Energy Fuels (CLNE) is doing its best to provide them. We know that there's been no move by the federal government to say all federal trucks, including the post office, have to buy these trucks. There has been no support from Exxon Mobil (XOM), the largest producer of natural gas, which wants it to be used exclusively by utilities, even as pretty much every utility that can switch has switched.

 

That means the fuel is not going to be adopted early enough to get the price of gasoline down and to provide for domestic security against a supply interruption that could be caused by an Iran-Israel war. That's not far-fetched. The New York Times reports that the leadership of Israel is in favor of such a strike to head off a second Holocaust.

 

So we have the worst of all possible worlds.

 

We have sky-high oil prices that can hurt American consumers with this endless climb in gasoline. We have an abundant fuel that is being ignored by Congress, so it is now causing layoffs. And we remain as energy dependent on our enemies like Venezuela and on the powder-keg countries in the Middle East as we have ever been.

 

Put simply, it's nuts. It makes no sense. But a combination of chemical company lobbyists, the green movement and a president who is on record as despising all fossil fuels has doomed the extended use of natural gas. It's a sad commentary about a once-in-a-lifetime opportunity to change our nation's fortunes.

 


Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for his charitable trust, Action Alerts PLUS,  which has no positions in the stocks mentioned.

62Comments
Mar 29, 2012 1:21PM
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it is horrifying that this guy is allowed to perform his con game on MSN and MSNBC
 
Say what you want about Cramer, but this article is spot-on.  Argue the message, not the messenger.  Is this all you do is hang around waiting for a Cramer article to be posted so you can pepper it with bile?  Get a life, man.
Mar 29, 2012 1:46PM
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I live in Singapore and go to Thailand for business often.  They have little oil but lots of natural gas and have converted most of their trucks hauling product to LNG.  They have also built stations to support them.  This has all happened in the last five years.  So our leadership can't do better than a third world country??   We need more engineers and not liberal arts majors and lawyers in government who couldn't pass calculus.

Where is the leadership?

Mar 29, 2012 12:46PM
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Exxon should provide for natural gas fillips at their filling stations and discount houses such as Costco, Fred Meyer and Safeways with filling stations should be encouraged by the regulators and EPA to offer an alternative fuel pump at each of their filling locations. The convenience would in turn encourage consumers to indulge in this viable alternative.
Mar 29, 2012 1:44PM
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For once Cramer's right. This divided congress and our president are missing one of the greatest opportunities to encourage energy independence and create not save thousands of  American Jobs.  Additionally natural gas is cheap.  The technology already exists to fuel our cars and trucks with it. 

 

On a positive note private industry is not waiting for the politicians.   GM and Chrysler just announced they would begin selling this year bi-fuel NG powered trucks and UPS is in the process of converting its entire fleet of delivery trucks to natural gas. 

 

 "Lead, shut up or get the hell out of the way"  In this instance the politicians should just shut up and get out of the way. 

Mar 29, 2012 1:22PM
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It's mostly the Administration that is impeding natural gas markets. Makes no sense at all.
Mar 29, 2012 1:18PM
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Even if you ingore Cramer you have to ask why in the hell we are burning a natural resource that's a third the cost of Oil rather than using it. Infastructure is too costly?  It was costly when we started with Oil, but the profits trumpted the costs. Not enough people will use it? B.S. when they see the smaller cost they'll be all over it. The Prius is one of the best selling cars in America and not because it's pretty. Talk about lambs to the slaughter. I especial like the " retail dopes" comment after I'm up 86% on my investments year to date from one of the guys who was too scared, incompetent or FOX news'd to understand what the market was telling him over the first quarter. You keep being pissed at the world and I'll keep making money. Put in the stations and build NG cars. Why is it that you have to literally drag these idiots up to the solutions and spoon feed them before they see the point of it all? 

Mar 29, 2012 2:51PM
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duaheat - Ethanol is a joke!   So much fuel is wasted to make it.  (plant the seeds, harvest the crop, chop it up, then stew it to make the ethanol.  How many trucks and tractors do you think it takes just to get ethanol to your tank?

 

Then we simply ship the end product to other countries.  In my area most fuel only has about 5% of ethanol in it. 

 

Natural gas comes strait out of the ground.  They only have to compress it and filter it before it goes into your tank.  I was just in Lima, Peru and the filling stations have Natural gas lines running to them. (No storage tanks or trucks to bring it to the station)  The only thing the filling station does is compress it into your tank. 

 

Do you not have a natural gas line running to your home?   So what is the problem with opening up some filling stations?    OUR GOVERNMENT ! ! ! ! ! ! ! ! ! ! ! ! !

 

In Lima, Peru you can put a natural gas system in your car or truck for about $1,200.00 

To fill a tank cost $13 and you can go about 150 miles on one tank. 

Mar 29, 2012 2:16PM
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It's clearly in the country's best interest to make full use of our natural resources responsibly. Development of our natural gas resources will create badly needed jobs, strengthen our country by lessening our dependence on foreign oil suppliers and, to boot, it's environmentally friendly and  cheaper. 

 

Congress has always and should continue to offer incentives to entrepreneurs willing to risk developing new businesses that move the country in a direction best for its long term interests.

Mar 29, 2012 3:20PM
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I am from Pittsburgh and we have two compressed natural gas filling stations in the area.  I have two compressed natural gas burning cars.  My wife and I pay $1.79 for an equivalent gasoline gallon to fill up the six gallon natural gas tank in the trunk.  The cars are bi-fuel and run on natural gas when there is natural gas in the tank, and gasoline when the natural gas runs out.  There is no downside to these cars, and they get 23/29 miles to gallon whether in natural gas or gasoline mode.  Everyone out there should be demanding more natural gas filling stations and automobile options, not only trucks that are bi-fuel to be made available to the public.  Meanwhile it will be costing us less than half of what almost everyone else is paying for fuel. 
Mar 29, 2012 2:35PM
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These high gasoline prices are killing us Americans.  I'm thinking about selling all of my toys ASAP (Boat, bulldozer and my truck.)   To fill up my truck now cost me $160   To fill up the bulldozer $400.00  To fill up the boat would cost about $340.00

 

In return my family is just not purchasing anything we don't need.  We are eating at home now!  (We use to eat out just about every meal.)  We are not going to the movies anymore.  (Thank you REDBOX)  We are not taking any trips this year. 

 

I use to invest in stocks but I have been out of the market for over a year now.  I think we are at the height of the bubble again.  I talk to every retail person I can about how they are doing.  I can tell you they are all hurting real bad.   Most tell me they are just not seeing any more customers.  They don't know how long they can hold on and are sure not thinking about re-signing the store leases. 

 

You are right we need Natural Gas to fuel all of your cars and trucks within the near future.  Being in Texas I have some insight as to what is happening in the oil fields.  I can tell you they are pinching down as many Natural Gas wells as they can.  They are not signing any more property lease so they can drill. in other parts of the world they have cars and trucks that run on Natural Gas.  America does not want that because of the amount of people that is being employed by the oil companies on the refining side.  Do you know how much taxes these companies and their employees pay to the government?   

 

I hope everyone is taking note of the changes Obama has brought to the USA!  I hope everyone votes to remove this clown from office.  We will not survive another 4 years with him as our President. 

Mar 29, 2012 4:15PM
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Jim is actually right on about this.  CNG has run Atlanta's trash trucks and city busses for almost 20 years, what a HUGE difference.  If Obama had been smart he would have in his first 3 months in office pushed for all 18 wheelers to be using CNG within 8 years, totally doable, and could have claimed two victories, one environmental, the other using less imported oil.  What a blown opportunity, but hopefully the idiots in DC will get a clue.
Mar 29, 2012 3:47PM
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As usual what you wrote makes perfect sense, that is why nobody listens. I come from Italy where my brother more than 20 years ago converted his  gasoline car  into a natural gas car, spending about $500. That car ran for another 15 years. Even in Italy there are fewer  natural gas stations compared to the gasoline ones. But they are strategically placed at distance of about 10 miles from each other and they are a great success. And Italy buys natural gas from Lybia.  Much cheaper than oil.
Mar 29, 2012 2:25PM
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Why don't we have any of these things ? Because almost 40 years ago during the first Arab oil embargo (soon followed by the second Arab oil embargo) a decision was not made to start looking for alternatives to oil. Nobody needed a better excuse at that time to start looking for alternatives because it was demonstarted how we could be brought to our knees by a few small countries in the Middle East. We already know. We've known for 40 years .. longer, even. But very little has been done. The slow-motion train wreck goes on and here we are complaining about $ 4.00 gas.
Mar 29, 2012 4:18PM
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That's how stupid Americans are.  All we need to do is start demanding natural gas as an alternative fuel manufacturers will provide the engines to use it.  Compressed natural gas has been used as a car and  truck fuel for a long time.  Not only is it cheaper it is incredibly clean.  Not only does it put less carbon into the atmosphere, but it will reduce the amount of motor oil we would use because of how clean it burns, oil changes are needed on a much less frequent intervals.  Yes, increased demand would lead to increased cost, but because it is so plentiful the increase would be negligible.  Does it have drawbacks as a fuel for autos?  Of course.  Less horsepower and range are two, but is it not worth the price to pay for a more stable domestically available fuel source that morons across the ocean cant control?  I say yes.
Mar 29, 2012 4:13PM
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QUOTE:  "" It is EXTREMELY explosive and dangerous.""

 

Sir:

 

We use it in our homes...  I wouldn't use gasoline in my home on a bet!!!

 

 

 

Mar 29, 2012 3:29PM
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It may be a matter of when Big Oil becomes thoroughly positioned to profit (obscenely)  from NG.  There are smaller companies that aren't waiting for government incentives to move forward, which I hope continues.

Mar 29, 2012 1:54PM
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why pick Thailand as an example. why not Pakistan or Iran?

 

Country’s share of the world’s total NGVs

Country Number of Vehicles % of Total NGVs Worldwide
Pakistan 2,850,500 21.56%
Iran 2,070,930 15.67%
Argentina 1,927,007 14.58%
Brazil 1,667,038 12.61%
India 1,100,000 8.32%
China 754,659 5.71%
Columbia 340,000 2.57%
Thailand 238,583 1.80%
Mar 29, 2012 3:29PM
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Not only is our President foolish, he is also stubborn. This combination provides us with the unfortunate situation we find ourselves in at present. Hopefully we can vote Mr. Obama out in November and replace him with someone that has a clue about what our national energy position should resemble. A move toward harnessing Nat Gas could lead to the creation of thousands of jobs. We could become energy self-sufficient almost immediately and the revenue produced by exporting this product to our friends in the middle east( at a tidy profit) coupled with the savings from utilizing this energy source would place us firmly on the path to drastically reducing our huge national debt, Lets all hope this come to fruition.
Mar 29, 2012 3:29PM
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Here in Colorado, where water is very scarce,  'fracking' is often employed when drilling for water. It has been going on like this for many years... Make what you like of that but we need the water.

 

We who use natural gas, here in Colorado, are forced to pay a surcharge in order to support the building and maintenance of a natural gas pipeline which delivers gas to out of state consumers.  This pipeline creates competition for the product, thus raising the price which we must pay for natural gas...  Talk about being "hung by one's own petard."

 

When I called  my gas company -- XcelEnergy -- the other day in order to pay my gas bill I was aked to "dial 8" in order to hear the robotic operator in English...  One wonders what country now owns ExcelEnergy.

 

Once, when I asked an acquaintance -- an executive at Exxon/Mobile -- what he would do if  his company simply left the US, he unashamedly replied: "I am a citizen of Exxon."

 

If we are to utilize the energy of natural gas to its fullest it will require that Congress legislate its use so that we do not find that most of it is being shipped overseas as LNG in order to line the pockets of a few wealthy businessmen and their 'toady' politicians.

 

 

Mar 29, 2012 4:58PM
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Mr. Cramer,

 

When someone is right they are right...  It has -- finally -- come around to be your turn...

 

YOU ARE RIGHT SIR!!!!!

 

[Not because 'I' say so, or you either, but because the numbers all add up correctly.]

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