WATER IS AMERICA’S GREATEST WEALTH
By Chriss Street
Voters surveyed in the recent California Field Poll regard the current economy by a 72% to 16% margin as bad times versus good times. National surveys demonstrate that this pessimistic appraisal that only a small percentage are benefiting from the economy is not confined to the Golden State.
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The Rasmussen Poll reports that over the last four years Americans’ concern about the prospects for their financial future has risen to an all-time high. Only 27% of Americans still believe it is possible to work hard and get rich, while just 25% believe the economy will be stronger a year from today. But due to the opportunity to leverage our water resources to dramatically increase oil and gas production, the United States is on the verge of an economic Renaissance that will spread prosperity to a very broad cross-section of our nation.
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The U.S. covers the
temperate portion of the North American landmass. The Rocky Mountains
dominate the western third of the nation, generating a rain-shadow effect on
the eastern slope across the Great Plains and into the Midwest, which is the
largest contiguous acreage of arable land on earth. The wide north-south
bands of precipitation also make this zone the most agriculturally productive.
Farther east, the lower and thinner Appalachians create a
substantial barrier, but the lower mountain elevation combined with the wide
coastal plain of the East Coast does not result in the rain-shadow effect of
the Great Plains. The Sierras create a rain shadow effect for the West
Coast. Consequently, the vast majority of the United States is
well-watered.
The dominant features
of the United States are the 6 major river system networks in the middle third
of the nation. Unlike most river systems that begin at high elevations,
the U.S. central rivers tend to run along flat plains that allow sustained
navigable travel for up to 2000 miles. Since shipping goods via waterways
is 10 to 30 times cheaper than by road, America benefits from its prime
producing agricultural lands being within 120 miles of a navigable river.
Trucks and railcars may be used for collection, but river ports allow
farmers to easily and cheaply transport crops to domestic and foreign markets.
The economic advantage
of water traffic explains why the United Kingdom, France, Germany, Japan and
the United States have been economically dominant over the last 500 years.
Third world countries without inland navigable waterways; such as Mexico,
Brazil, South Africa and now China, can exhibit tremendous rates of growth
providing cheap out-sourced labor. But once wages rise and manufacturers
find themselves unable to compete in export markets, the countries enter the middle-income trap and
investment in new plant and equipment stagnates causing production fall
steadily.
In the 1990s, America
adopted an industrial policy that favored personal consumption over industrial
production. For manufacturers, labor is only 8.5% of production cost,
whereas energy is a much larger 13.5% of cost. Public Policy makers
believed that since the U.S. was passing its Peak Oil production
point and the nation had high wages; the combination of rising energy cost as
oil became scarce and high worker wages, doomed domestic manufacturing to
decline with the decline in oil production. As U.S. Field Production of
Oil fell 54% from 2.6 million barrels a day in 1978 to a low of 1.2 million
barrels in 2007, thenumber of U.S. manufacturing jobs fell
29% from 17.1 to 12.3 million. During the Great Recession,
manufacturing employment fell to 10 million.
But since 2007 there
has been a revolution in oil production due to a big increase in fracking of
shale deposits. There are plenty of shale deposits around the world, but
only the U.S. has the 3 and 5 million gallons of water to necessary to frack
the average 1500 horizontal well fracking site in North Dakota, Texas,
Pennsylvania and California.
At the February 5,
2013 U.S. House Subcommittee on Energy and Power met on “American Energy
Security. The Energy Information Agency reported that domestic crude oil
production rose by 11% in 2011, 14% in 2012 and is expected to increase by
another 24% to 7.9 million barrels a day by 2014. This huge increase in
U.S. supply has resulted in domestic crude in the Midwest selling at a 20%
discount to imported oil.
The manufacturing
sector responded to cheap oil by hiring 2 million workers since 2010.
U.S. labor productivity still leads the world with a 2.1% gain that generated a
3.3% rise in production last year. A recent survey reveals that 88% of manufacturing industry decision
makers either have hired new employees or have plans to hire this year.
The Obama
Administration recently confirmed oil expert Dr. Ernest Moniz as the new
Secretary of Energy and has nominated former oil geologist Sally Jewell as
Secretary of the Interior. Senators from both parties had been bickering
about the fall in energy royalties as exploration on public lands fell in 2011
by 11% and fell again in 2012 by 26%. But last week it was all smiles and
compliments for the Administration about the potential for booming jobs at good
wages and rapidly rising royalty revenues.
CHRISS STREET & PAUL PRESTON
Present
“The American Exceptionalism Radio Talk Show”
Streaming Live Monday through Friday at 7-10 PM
Follow Blog: www.chrissstreetandcompany.com
Present
“The American Exceptionalism Radio Talk Show”
Streaming Live Monday through Friday at 7-10 PM
Follow Blog: www.chrissstreetandcompany.com
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