It would be easy to brush off President Obama’s “Blueprint for a Secure Energy Future” initiative and associated speech yesterday as the obligatory promise to lower dependence on oil in response to the latest surge in gasoline prices.
That’s the start of a brief note from BarCap. And yes, the speech was easy to brush off, sounding to our cynical ears like the kind of speech presidents have been giving since well before this correspondent entered the world.
That said, BarCap think they’ve spotted something noteworthy, cautiously concluding that natural gas came out the big winner:
Unlike the 2010 State of the Union speech in which natural gas was off the radar screen, in this speech natural gas was cast as a central pillar of the “Blueprint.” When discussing “new sources of energy…[t]he first is natural gas.” This is quite a status change for gas; indeed, natural gas is now in the select circle of alternatives when the president discusses “clean energy” and “alternative fuels.” These designations are important when incentives roll out of Congress, standards are set, and energy policy is in play. Credit for the newfound favor of natural gas likely goes to two sources. First, the American Natural Gas Alliance (ANGA) has been effective in shifting perceptions in Washington about the abundance of gas in North America. Second, when discussing plans to lower the use of oil, there are perhaps no other alternatives that have scale in the timeframe pledged by the President. Compared with past speeches, wind and solar appear to have been mentioned far less often. It could be that Americans just do not see the link between green electricity and lower gasoline prices.
The speech noted two ways that natural gas could help reduce the use of oil. The first is the direct use of natural gas in transportation. … The second is providing electricity from clean energy sources to power vehicles. The president set a goal of generating 80% of US electricity from clean energy sources, and, notably, natural gas is included on the “clean” list. With the transportation and power markets the largest potential sources of demand growth for the gas industry, we see the speech as offering a tantalizing push.
Bottom line:
If – and we stress if – Congress decides to pursue energy legislation, natural gas should be well positioned. The timing appears serendipitous. If resurgent gasoline prices catalyze a public push for Congress to react, natural gas should have a front row seat at the debate. The deferred part of the natural gas price curve, in 2015 and beyond, would be the place for investors to look for gas to be supported by any federal proposals.
This is well beyond our expertise, but thought we’d pass it along.
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Meanwhile, the blueprint also included this bit of nationalistic zero-sum thinking competitive patriotic inspiration:
A global race is underway to develop and manufacture clean energy technologies, and China and other countries are playing to win.
Well, we didn’t presume they were playing to lose.
But this part of Obama’s speech was, one must say, less inspiring — as described by the FT:
Mr Obama acknowledged that progress would come at a cost when Republicans are pushing to make deep cuts in research and development for alternative energy.
“It is fair to ask how we’ll pay for all of it,” Mr Obama said, though he did not provide an answer to his own question.
And if you want more detail on cleantech investment, the Pew Charitable Trust has just released the latest edition of the aptly named “Who’s winning the clean energy race?”. And the answer is… yep, China:
And here’s what everybody is investing in:
Total investment in cleantech hit $243bn last year, up 30 per cent from the prior year. Just keep in mind that because China is stealing your babies while you sleep winning, you’re prohibited from being happy about any of this.
We kid, of course. Given HSBC forecast Wednesday that there are only around 50 years of oil left, the world should be welcoming all the help it can get — from anywhere — with the push for cleantech.
Read the blueprint here, the Pew report here, and the BarCap note is in the usual place.