America in Decline…Is Natural Gas the Answer?

Hopefully by the end of this post I will have convinced you that, although our role in the world must change, it doesn’t have to mean that America won’t be the pre-eminent military and economic power in the world.

If you were to Google the words “America in Decline” you would an endless number of articles on the subject. Also, you would find a few that say the American decline is a myth. One of the better articles, in my opinion, is by Christopher Layne at The National Interest, which is titled The Global Power Shift from West to East.It’s more than an article. It’s more like a dissertation. Seven pages long, you may want to bookmark it to read at your leisure. The article covers a lot of history and demonstrates that not only will the United States lose its seventy year reign as world’s greatest military an economic leader but the Western nations in total will lose their 500 year dominance over the world. Mr. Layne recognizes that it will take decades before China is at parity with the US militarily; but, because of our economic weakness, we will not be able to control China’s intentions in the Far East.  The article talks about how China has become the manufacturing capital of the world and how they have taken over markets that were once dominated by the United States.

Okay, we can’t deny that the world has changed and continues to change. Countries like China, India, Brazil and Russia are gaining in wealth at an incredible rate. America’s wealth as a percentage of the world’s wealth is declining as other countries become richer. Of course that will alter geopolitics in the world. But does that mean the American can’t remain an important player or even the most important player?

Being the contrarian that I am, I believe we can continue to be the most important Player even though there will be other important players too. For this to happen, I believe that we must stop looking for leaders to lead the way. We don’t have those kinds of leaders. The leadership is going to have to come from Main Street America. And, I believe if Main Street America has the information they need, they will rise to the challenge. Americans need to become informed about two critical issues and then decide they will change they way America does things in the future. First they must learn that America is broke and what must be done about that. Second, they must come to terms with the fact that as a country, we are no longer economically competitive and what can we as a people do about that.

America is Broke

I’m not going to bore you with all the reasons we are in the financial mess we are You, dear readers know the whys as well or better than i do. But, it is not clear to me that Main Street America knows or understands we are broke. Certainly the young OWS protesters do not know. The Democrats and the liberals either do not know or don’t care. I don’t think Barack Obama cares. Somehow we must find a way to make sure Main Street America is aware of our dire straits and that they understand that we simply can not afford our government and all the things they think they should be doing for us. I found and borrowed this video at America’s Watchtower yesterday. I commented that this video should be on prime time television every day from now until the elections. Take  a look.

What ever the means, we who know better have got to get this message out to those who don’t yet know. We have to educate the people that there are ways to reform Social Security without harming those that are already dependent on these programs. Paul Ryan and others to know how to do it. But the “leaders” in Washington are likely to do nothing unless there is a ground swell of pressure coming from Main Street. The bottom line is that we can not afford this government anymore. In this post I laid out why I think electing  Mitt Romney is an important first step. In short I said that if we elect the Republicans and them hold their feet to the fire they will reduce corporate and other taxes and reduce some of the business stifling regulations and open up drilling for oil and gas. these acts will create an environment for the economy to start growing again. I further suggested that a growing economy would have unintended consequences that would cause inflation and cause the bond market to drive up interest rates. These unintended consequences along with pressure from Main Street will force the government to do what must be done to severely downsize our government to a manageable level.

America’s Competitiveness

Lowering corporate and other taxes will help make the US more competitive. But, I don’t think will be enough to keep us the most important player in the game.  I’m distressed when people cry about the greedy capitalist sending American jobs to countries with cheap labor. Capital always flows to where it can earn the greatest returns. Right now China and India and Brazil are growing much faster than America. China is the manufacturing capital of the world today. But keep something in mind. China is a centrally controlled economy and starting from nothing it has been  easy to show dramatic growth. But, like all centrally controlled economies, they are and they will continue to go from crisis to crisis. They know the must start consuming more. But, to do that wages will have to increase. Eventually they will lose their competitive edge to countries like Thailand, Vietnam or, Bangladesh. So, accepting this reality, how does America compete with cheaper labor in other parts of the world. Must we wait hundreds of years until all countries are equally wealthy or equally poor? Twenty years ago or even ten years ago I might have said there is no way for America to be competetive in today’s world. Once we could count on our talents for innovation and productivity improvements to keep us on top. Today technology can be bought, stolen or cloned. Yet I do believe there is a way for America to compete in today’s world. I believe the answers has to do with energy; specifically with natural gas.

When Newt Gingrich was still a candidate for the Republican nomination for the presidency, part of his plan to put America back on the right track was for America to become energy independent. That is still a good plan and we can do it. America does not need to be dependent on OPEC nations anymore. Although a move in this direction would tend to move oil prices down in the world in the short term, as other countries continue to grow they will  increase the demand for oil and prices will continue to rise. The other reason it is a good idea is, as Newt pointed out, there will be trillions of dollars in new royalties flowing to the government that could be used to pay down our national debt. But, we still have the issue of our competitiveness.

The answer, I believe is natural gas. America, like no other country has been blessed with enormous reserves of  natural gas.  If America were to convert all their cars, trucks, and tractors to run on natural gas instead of gasoline, if America were to convert all their coal-fired power plants to run on natural gas instead and, if all the homes in the northeast that heat with fuel oil were to convert to natural gas, America would have the world’s lowest cost of energy and that, my friends would allow America to compete with any nation; no matter how cheap their labor. Not only would we attract capital investment back to America, we could be exporting oil and coal. Think about what that would do to help our balance of payment deficits.

We have the supply. All we need to do now is provoke the demand. I believe if Americans understood what we are up against, the will rise to the challenge. If we wait for our “leaders” to show us the way, America will surely decline to a second-rate nation.

Well, that’s what I’m thinking. What are your thoughts?

20 thoughts on “America in Decline…Is Natural Gas the Answer?

  1. We may have nat gas, but China is buying up all of the rare earth metals sources. Those that make our telephones, and electronics, cars go for starters. Last I heard they were necessary for catalytic converters. The future rests there and unless we get a move on, we will be left in the dust. At least we perhaps we can stay nice and toasty warm, though others may know more about this issue. This is just what I have read. Nice thought!

    1. I wish I could agree with you, Kurt. Workforce participation has been falling since 2000. Our trade imbalance is unsustainable and so is our debt. We must find ways to become more competitive, in my opinion.

  2. Zeroing in on natural gas is an exceptionally astute observation at a variety of levels…

    First, natural gas already supplies about 25% of ALL U.S. energy consumption today and that is forecast to increase to 27% by 2035 according to the EIA. The U.S. is natural gas independent.

    Second, the EIA says renewable/green energy supplies about 15% of all U.S. energy consumption today and that it will increase to around 20% by 2035.

    In other words, natural gas alone will supply more than all renewable sources combined for decades to come.

    Third, by 2035 EIA forecasts that 50% of all natural gas will come by “fracking”.

    Fourth, President Obama issued an executive order just a few weeks ago to set “fracking” standards for natural gas. On the same day an EPA study was started to look into “fracking” in both natural gas AND oil production.

    It is my belief that based on President Obama’s “Blueprint for a Secure Energy Future” that his administration intends to shut down “fracking” wherever it can, especially for oil and gas production.

    “Fracking” or “not fracking” will determine U.S. future energy independence… nothing else.

  3. We are broke. All other solutions will have to wait until people realize we are broke and stop demanding their “free stuff” from the government. And that, quite simply, will never happen. The people are addicted to the government teat and nothing can stop them from sucking from it eve after its dry.

  4. For this household to convert to natural gas for heating (We heat with oil right now, as do many private households and businesses in the Northeast), converting over needs to be made more affordable. The last quote I had was $10,000 — and, as far as I know, converting over doesn’t even give me any kind of tax break or tax credit.

  5. I have a technical question about using natural gas as an automotive fuel. My understanding is that cars would run on compressed natural gas. Would there be additional safety measures automakers would need to take to keep the compressed gas from exploding in a collision? I spent a decade or so in the insurance industry, and have seen some genuinely horrific accidents as a result; I just keep imagining the impact a fireball from an exploding propane tank would have in everyone in the immediate vicinity of a high-speed interstate collision. I’m sorry if that’s a stupid question, but engineering’s not my forte 🙂 Thanks! — Kelly

  6. Thanks for the link Jim. I wish I could remain positive about America’s future but I just don’t see any politician who will be willing to do what it really takes to right this ship.

  7. Two Interesting posts, Jim.
    The first one, about the decline of America and the Western World with it, is fascinating and, I think inevitable; no civilization has ever survived itself in the history of the world. And I say “itself” because there is where we must first look for the causes.

    The second post, about natural gas, is also interesting and a potential source of renewed strength for our economy, but it is only one wheel in the multi-wheel machine of economic strength.
    The two post are tied together only in as much as the second plays a part to the denouement of the first.
    PD1. I cannot resist to point out that no civilization has ever been saved by “main street” – the masses. The masses destroy, they don’t build. The masses must be guided in order to become a positive force.
    PD2. Go back later to the subject of post one.

      1. Precisely. I agree. Democracy contains within it the seeds of its own destruction. Our forefathers designed a Republic where democracy was used as a means to and end, with strict boundaries of containment. We managed to destroy that containment in the last 230 years, and are still at it. The masses now demand their pound of flesh; and there will always be a politician that is willing to give it to them.

        Democracy, as we know it today, is doomed. It is just a question of time. A re-engineering of democracy is necessary and possible, but it is only a new society or civilization that can possibly do it. That is the historical cycle of nations and why old ones die and new ones take their place.

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