Rocky Mountain Surplus

In Seven States of Energy Debt I added an energy-twist to the current comparisons between fiscally troubled European countries like Greece and Portugal, and their counterparts in the US such as California, Illinois, and Florida. In addition to high rates of unemployment, a number of US states are also significant energy importers or worse have virtually no energy production at all, from which to draw steady revenue. But what about the other side of that equation? What about US states whose energy production well exceeds their energy-using populations? Yesterday I had a good conversation about this issue with Rich Blake, a journalist from ABC News, and I found myself thinking about Colorado.

Colorado produces about 40% more energy than it consumes. It’s an enormous producer of natural gas, and a minor producer of coal and oil. What’s impressive also in Colorado, based on my recent trip to Denver last Autumn, is to witness the accelerating level of awareness on the part of the Governor, Mayor(s), and Senators/Congressmen that any reduction in automobile use and related infrastructure would bring the state into even greater energy surplus. To this point, both the city of Denver and the State are very much behind efforts to build out both Denver and Front Range rail transport, and they are already very much underway in that effort.

It is perhaps instructive, therefore, that Colorado unemployment on both the narrow and broad measures sits below national averages. Narrow unemployment in the state is 7.5%, and under the broad measure is currently at 13.7%. But compare these to national averages at 9.7% and 16.5% respectively. For greater contrast, compare to states such as California, with its woeful 12.4% and 21.1% rates, respectively.

Colorado, which has been transitioning steadily to the use of natural gas in both its household and commercial sectors, still only uses 40% of the natural gas it produces. The other 60% is exported via major pipelines and, functionally speaking, Colorado produces alot of the natural gas supply that is pushed westward each day to the energy deficit states. The less Colorado uses cars, and the more it relies on its own natural gas, the further Colorado gets towards becoming a power-sector state, which is exactly the direction we must go in the post peak, post-liquids era. More broadly, to the extent Colorado uses net fossil fuel earnings to build more rail transport and while also embracing wind and solar (with its above average sunshine supply) the Rocky Mountain State is already conducting its own version of energy transition.

-Gregor

Photo: Willow Creek, Colorado 1942. By Andreas Feininger 1906-1999 via Library of Congress on flickr.

Further Reading: The Grand Energy Transition, by Robert Heffner

  • Tom
    Really appreciate your insights!

    Since California is an energy IMPORTER, should Gov. Schwarzenegger be promoting oil drilling to get California back on track to solvency?

    Thank you.
  • Petroleum_Engineer
    Enjoyed the article. However, as I pointed out to my daughter's Girl Scout troop (The girls are studying energy use and conservation), Colorado is much worse than the national average for coal-fired electrical generation, which many do not realize. This is particularly tragic given the abundance of natural gas. The latest electrical generation plant to open in Colorado will be coal-fired, and not natural gas-fired, which is tragic. For the Girl Scout talk, my wife brought a natural-gas powered Honda Civic GX from her company, and I brought one of our two gasoline-electric hybrid vehicles.
  • Radiohead3
    Really enjoy reading your analysis. On another note, I know you have launched a couple of new services, but I am wondering if in any of your services you talk about individual stocks? I know this blog is more macro, but I am curious about your opinion, if you have one, on a specific stock. The stock is ATPG, and if you've written any analysis related to it, is there any way to buy it one-off? Thanks.
  • gregor.us
    Cheers.

    At www.gregorweekly.com, I do take positions in a model portfolio. I buy and sell them over time, and of course subscribers know about that in real time. That service is 400/year or 49.95 per month.

    You might consider reading my 2009 Annual, as a low-cost way to see if you like my material. It's 147 pages, and because it's energy-macro, all the issue I addressed last year are still very much in play. That's a kind of book, if you will, for 49.95.

    My newsletter service here is 390 per month. More expensive but for people managing money, they really just need larger themes as they are picking their investment vehicles already.

    Hope this helps.

    Gregor
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