Tuesday, March 18, 2014

Technology Heals All Wounds

Dr. Bruce Cordell writes an excellent overview of space exploration and technological trends in 2014. Dr. Cordell makes a number of wonderful observations and predictions about space exploration in terms of what he calls the Maslow window, the appearance out of every five or six decades of an optimistic, technologically expansive one that appears because of exuberant public opinion.

From a policy standpoint, the gist of Dr. Cordell's essay is that the force of technology is so substantial that it can even overcome government's restriction, suppression, and misallocation of economic resources. I don't tend to be so optimistic, but Dr. Cordell may have a point.

As an investor in natural gas pipelines and infrastructure (in firms and Master Limited Partnerships like Chicago Bridge and Iron, Kinder Morgan, Vanguard Natural Resources, Oneok, and Dominion Resources) I am betting on a natural gas boom.  The implications of America as an energy exporter are that the costs of misallocation of resources through regulation, monetary expansion, a subsidized banking system, and government mismanagement can be overcome by significant energy revenues that  open up because of shale oil,  fracking, and other new energy technologies.

Back in 2009, when I last taught an evening course at NYU's Stern School of Business, I got into a friendly argument with a student who was obtaining his MBA to further his career as an energy trader.  The student insisted that, based on Matthew Simmons's thesis in his Twilight in the Desert, oil production had peaked.   I countered that rising prices will stimulate new technologies.

At the time, I knew of a firm that had invented technology to extract the remaining oil in existing oil wells. The current technology depends on water, but that fails to get at the large amount of oil still in depleted wells. Since then, fracking and shale oil technologies have exploded the potential for energy production in the US.  Investors in energy stocks are speculating that America will become the Saudi Arabia of natural gas.  If so, the American economy may turn out to be resilient despite Washington's insane economic policies.