Considering the government shut down at the stroke of midnight, irresponsibility is a good theme for today’s article…
Plus being just a hop, skip, and jump from the D.C. Beltway means I’m privy to the slew of horror stories emanating from Capitol Hill this morning.
But are bad decisions really a new phenomenon in this country?
Of course not.
To prove my point, I want to share with you a tale that stuck with me during this morning’s pre-dawn commute. It revolves around a lesser-known natural gas boom that occurred in the state Indiana — and the poor decision-making involved.
Gas City, USA
Few people have heard of the Trenton Gas Field, which was discovered in Indiana during the latter half of the 19th century. The find came just two decades after the historic Drake Well was drilled 400 miles away.
A few years after development of the Trenton field began, geologists realized that more than a trillion cubic feet of natural gas and nearly a billion barrels of oil were lying beneath 17 Indiana counties.
At the heart of this boom was a tiny town in Grant County called Harrisburg…
Harrisburg’s sudden good fortune prompted citizens to appropriately rename the town Gas City.
As with all oil and gas booms, drilling accelerated, pipes were laid, and the cheap fuel soon flowed out of the Midwest. In less than 24 months, Gas City’s population grew a jaw-dropping 16,500%!
Now, I wish I could tell you that Gas City’s fate had a fairy tale ending.
However, Indiana’s gas boom was short-lived.
You see, the element of this boom story that stands out more than anything else is the utter and irresponsible waste that came in the wake of the gas discovery. The best example of this waste is the huge flambeau light displays that lined the streets of Gas City.
Calling these displays decadent would be an understatement — yet it was all too tempting (and easy) for the town to show off what must have felt like a near limitless gas supply.
Despite every beneficial advantage that was associated with booming natural gas production — such as the extremely cheap fuel available to manufacturers and homeowners — the flambeau displays like the one above were an egregious waste of Indiana’s gas resources.
Indiana’s gas boom quickly dissipated, thanks to this kind of shortsightedness.
As a parting shot to this boom and bust story, geologists believe that more than 90% of the oil resource was left underground, unable to be extracted due to the lack of pressure.
Believe me, this is a mistake we don’t want to repeat.
New Gas Boom, New Decisions
Last week, some of my readers pointed out the eerie similarities between Indiana’s gas boom all those years ago and the recent shale gas boom that’s driving U.S. natural gas production.
I know that more than a few of them believe the unconventional production boom currently underway won’t last more than a few years.
But this isn’t necessarily the case…
Have a look at the Barnett Shale, the play that kick-started it all. Production here is still going strong.
In fact, producers in the Barnett are currently on track to top last year’s output:
Without the drilling done in the Barnett by George Mitchell, we can disregard every last cubic foot of natural gas (and most likely every drop of oil) produced in the now-famous shale formations that dot the lower 48 states.
That’s why discounting the Barnett isn’t a good idea — especially when we take into account a recent study by the University of Texas, which concluded the formation will yield as much as 45 trillion cubic feet of natural gas over the next four decades.
And the great news for the United States is Texas isn’t the only gas boom in town…
How to Invest in a Gas Boom
If the residents of Gas City were impressed with the trillion cubic feet of natural gas below the Trenton gas field, you can only imagine how they would feel if they knew that production in the Marcellus Shale may triple that amount this year.
But rather than wasting the gas on some extravagant street lights, that supply will be put to good use…
Right now, there are a little over 100,000 natural gas vehicles in the United States. The problem is that there are less than 650 CNG and LNG filling stations available for vehicle use.
But that’s slowly changing…
Roughly $2 million was recently allocated for natural gas filling stations in Pennsylvania; and while that comes out to only five new stations, it’s a start.
The truth is the best way to invest in a bona fide gas boom is to find the plays that stand to capitalize no matter how natural gas prices perform.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.
