The following is in response to our article, Black Gold, Texas Tea, which appeared on November 30:
Dear Editor,
Dick Vodra makes many points which are arguable. It is not solely “political gridlock” that keeps alternative energy sources from being developed. In fact, it is often political maneuvers that create uneconomic alternative energy projects. It is mostly pure economics that keep alternative energy from being developed. Oil is still too cheap and natural gas is abundant.
I disagree with Vodra’s and the President’s claim that there is no “easy oil”. This argument is sometimes used to enact uneconomic projects or interventionist laws. Improved drilling techniques (such as horizontal drilling), drilling in Alaska, and the more prudent use of local and state laws would encourage more drilling. The “easiness” of the oil is dependent on price. For example, at $500 per barrel there is lots of “easy oil.” With $20 per barrel oil, the opposite is true.
For example, here in Colorado it is harder to drill for oil (because of state regulations) than it is in Kansas, so companies avoid Colorado and go to Kansas. This creates jobs in Kansas and guess where it doesn’t create jobs.
The price of gasoline is too cheap and cars are getting more and more efficient. People are buying SUVs because they can fill up their tanks relatively cheaply. The Volt is being introduced and it will use electricity, which is often created by dirty coal. To purchase the Volt, the buyer needs a $15,000 subsidy to make it close to economic, (when we have abundant and very cheap natural gas.). When environmental concerns are brought to the forefront we need to be sure that the choices we make are environmentally friendly, economic, and help keep jobs in the U.S.
Those who want alternative energy should pray for higher oil prices. At $150 per barrel, most of the alternative energy solutions become economic. As a financial advisor, I encourage my clients to invest in diversified oil and gas companies that are able, through prudent operations, to buffer the volatility in the commodity price. In the last three years we’ve seen the NYMEX price of oil go from $60 to $140, back to $40 and now it is revisiting $88. A company needs to be nimble to deal with this kind of unpredictable fluctuation.
Thanks,
Kim E. Jones, CFP
Jones Strategic Financial Planning, LLC
Broomfield, CO
