Is Energy Changing the Economy

Image from the Business Insider.

Image from the Business Insider.

August 27, 2013

By Dr. Tyra OldhamLANDsds Sustainable Voice News

The consumption of energy is due to increase as the demand for more usage and population changes are ingredients to this growth. The boom in natural gas production which is topping the global production is at a high.  This production is economic boom but is it a economic boom overall? The answer is complex but answerable. The news is reported that the “U.S. Energy Boom Will Lift Economy And Stocks” is one aspect of the economic lift yet, the energy boom is in an economic bubble.

The Street offered, “The U.S. is now producing more oil than it imports. Expansion of chemical plants to take advantage of lower natural gas and natural gas liquids is continuing at a rapid pace. The first estimate of second quarter GDP came in at 1.7%, which was slightly lower than the 2% estimate. The Commerce Department also revised the first quarter down from 1.7% to 1.1% and the fourth quarter of last year was lowered to 0.1%, barely above stall.”

In early August, the U.S. Bureau of Labor Statistics announced July hires, which were at a slightly lower (162,000) than the expected 170,000. They also lowered the hiring numbers from the last two months by 25,000. One troubling aspect of the jobs picture is that there continues to be a large percentage of part time workers added instead of full time hires.”

Yet,  the unemployment rate for youth is around 13% and Blacks is upwards of 16%. The economic shift is in an bubble that at best has a ten year lifecycle. As the U.S. boost its natural gas production other nations are seeking alternative sources for energy production to offset their natural resources.

“In spite of these numbers, new car sales and new home sales moved higher. New home sales rose in June even as mortgage rates increased. The first half of 2013 consisted of sub-par growth with low inflation. However, economists still believe that the economy will pick up in the second half.”

The view that many of the purchases are by the baby boomers which is not an indication of growth but capital gains and investments.

“The rest of the world’s economies are doing very little to help our growth,” states The Street. “China’s economy is slowing as the government tries to reign in the explosion in bank lending and reduce the economy’s dependence on infrastructure and home building. We are well positioned to provide many of the items that will be needed for their growth. The U.S. Energy Information Administration expects energy consumption  to increase steadily for the next 30 years.”

The counter point is the lack of infrastructural development and the need for innovation formation supported by increased education.  The change in the middle class from resilient to shrinking is a demand on the economy. Further, the lack of job placements for matriculating graduates also offers a spin on economic forecast.

Energy boom has an a positive effect on the supply chain that can lead to cost reduction in transportation, manufacturing and fuel until the bubble burst placing pressure on surrounding industries to fill the gap.  A boom always comes to a close. The leaders in energy must not hold onto the rope until it frays leading to drop offs that fracture economic recovery. 

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Posted in Business, Economics, Energy, Energy Investment, Energy Speculators, Financial News, Fracking, Infrastructure, Oil and Gas, Renewables Alternatives, Sustainability Nexuses, Sustainable Voice

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