November 17, 2012
TRAGICALLY, WE HELD THAT POWER, TO RAISE PRICES AND GOOSE TECHNOLOGY, IN OUR HANDS ALL ALONG...:
US energy is changing the world again (Daniel Yergin, 11/16/12, Financial Times)
The idea of "energy independence" was first proffered by Richard Nixon during the 1973 oil crisis. Every president since has held out the promise that the US could return to self-sufficiency and so, it was thought, become less vulnerable to Middle East turmoil and high prices.Yet until recently, the only pertinent question seemed to be how quickly would the rate of oil imports increase? As it turned out, it was technology, facilitated by higher prices - and not grand policy - that have propelled the turnround of the past few years. Two developing technologies - hydraulic fracturing and horizontal drilling - were successfully combined to spark the US shale gas revolution. In a decade, shale gas has risen from 2 per cent of US natural gas production to 37 per cent. The US has overtaken Russia as the world's largest natural gas producer.Oil explorers soon began to apply these technologies to previously unproductive rocks. The result is the surge in what has become known as "tight oil" (owing to the density of rocks from which it is produced).The economic effects of this revolution in unconventional forms of production are already apparent. The most immediate has been in employment - more than 1.7m jobs have been created. The development of shale gas and tight oil involves long supply chains, with substantial sums being spent across the country. It is these jobs that have made Mr Obama and many state governors supportive of shale gas and tight oil.The impact will increase. By 2020, 3m jobs could be created by the energy revolution. Most will have salaries higher the average US job. This means more money for cash-strapped governments. By that year, government revenues from taxes and royalties arising from unconventional oil and gas could be over $110bn, according to analysis by IHS.The other increasingly important impact is on global competition. US natural gas is abundant and prices are low - a third of their level in Europe and a quarter of that in Japan. This is boosting energy-intensive manufacturing in the US, much to the dismay of competitors in both Europe and Asia. Billions of dollars of investment are now slated for US manufacturing because of this inexpensive gas.
...but instead waited until the profits were flowing to rotten regimes and speculators.
Posted by Orrin Judd at November 17, 2012 9:01 PM