Natural Gas Industry Takes a Huge Hit in NY

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Natural Gas Industry Takes a Huge Hit in NY

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Natural Gas Industry Takes a Huge Hit in NY

The blackout that struck the Northeastern region of the United States in 2003 left 50 million people without power.

Initially, the blackout was caused by a few high-voltage power lines shutting down after touching some overgrown trees. And thanks to a software bug in the power company’s control room, no alarm bells were sounded to warn anyone about the situation.

This set off a chain reaction that left many without power for days.

Fast forward to today, and another blackout is about to strike. Only this time, it could be driven by a lack of power. How serious is this?

Will This Vote Change Everything?

Two towns in New York – Middlefield and Dryden – recently prohibited private companies from pursuing hydraulic fracturing (fracking) operations.

In response, several companies decided to sue the towns – and the case went before the New York Supreme Court.

Since it’s perfectly legal to drill for natural gas in New York, you’d think the ruling would have gone in favor of the drillers. But you’d be wrong . . .

Instead, the court ruled in the favor of the towns, saying that local governments have the right to deny the use of land, even if state law says otherwise.

This could seriously impact natural gas supplies in the short term. But how will it affect the industry overall?

A Truly Unstoppable Force

There’s no question that the news will impact natural gas prices. But despite the setback, the fracking boom is set to continue.

States like Texas, North Dakota, Montana, Pennsylvania, Utah, Wyoming, Oklahoma, West Virginia, and Ohio are enjoying unprecedented economic windfalls from operations.

It’s estimated that over 1.7 million jobs are somehow related to the fracking industry. More than 600,000 jobs will be created by the end of the decade – and that will reach 3.5 million in the next two decades. These are high-paying jobs, mind you.

Simply put, there’s no way the industry is in danger of rolling over.

A report by IHS Global Insight estimates that we’ll see $5.1 trillion in combined investment in the industry through 2035. Of course, the study was funded by the American Petroleum Institute and the Natural Gas Supply Association – so you should view the research with a bit of skepticism.

Either way, there’s no denying that the natural gas boom – along with the coming explosion in liquefied natural gas – is both real and attracting tremendous amounts of interest.

And that money is going straight to state and federal coffers through additional tax revenue.

Despite the positive economic and security implication, though, many individuals are dead set on shutting down natural gas operations throughout the country…

The Opposition’s List of Grievances

Environmentalists claim that fracking can cause groundwater contamination, soil contamination, sickness, disease, and even earthquakes. (I’m waiting for pestilence to be added to the list.)

So they’re likely hoping that this ruling will lead to a paradigm shift in the sector.

The ruling does set a precedent that could undermine the energy lobbyists in places like Colorado, Florida and California – all states with active movements to either ban or restrict fracking operations. So far, only one case has been ruled in favor of the plaintiffs – and even that one is likely to face a significant appeals process.

And estimates for shale-related natural gas and oil, which promise decades of supply, haven’t factored in the potential fallout from these opposing forces. New federal legislation is also coming down the pike to force greater disclosure of the chemicals and processes for fracking – and those regulations will supersede state law.

Without question, the industry is facing scrutiny. But the benefits, which far outweigh the costs and risks, will allow the industry to thrive in the end.

Bottom line: In the meantime, it’s important to focus your investment dollars on companies that are producing and holding lands in the states with favorable consumer and governmental support for energy.

And “the chase” continues,

Karim Rahemtulla

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