Saturday, November 10, 2012

Natural Gas Prices Have Been A Tailwind

We should stop every now and then and count our blessings, America has been lucky during the great recession that new methods of locating and taping into deposits of natural gas have increased the availability and lowered its cost. It should be pointed out that natural gas prices have been a huge tailwind to the economy for several years. This is in effect the equivalent of a huge tax cut.

While economist often focus on the price of gasoline and oil, natural gas is often overlooked. The drop in price has helped lower the cost of generating electricity as well as the cost of producing many goods, natural gas is a huge component in many plastic and polymer materials. Natural gas has been trading for about $3 per 1,000 cubic feet across the country through much of this year. In Asia, it costs closer to $12.

This means that consumers have had more money to spend on retail goods because it has not cost an arm and a leg to heat their homes. It also means a bunch of good paying new jobs in exploration and development in the coming years. America would do well not to squander this good fortune and make the best use of this resource. This type of luck does not often occur.

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