WE MADE THAT:

What's missing from the discussion is an understanding of how the oil market got to this juncture and, notably, who brought it here.

The answer is surprising. It was the United States, mostly. Last year, the United States produced more oil than it had in 25 years, surpassing Saudi Arabia as the world's largest producer.

Perhaps the most intriguing part of this story is that one of the main participants in this revolution is the American government. [...]

Interest in shale deposits was driven by a search for gas, not oil.

But the oil embargo gave them a big boost. Congress passed the Energy Reorganization Act of 1974, creating the Energy Research and Development Administration -- which would soon become the Department of Energy.

This kick-started a period of heavy government investment in research and development to recover gas from shale. The agency provided funds for "directionally deviated" drilling, a precursor to the horizontal drilling used today. It subsidized the development of polycrystalline diamond compact bits to cut through the shale. It performed the first big hydraulic fracturing. Energy Department labs created a multi-well fracking test site.

Research at the Sandia National Laboratories into underground imaging -- based on microseismic monitoring once used to detect coal mine collapses -- was critical to map fractures and position wells.

George Mitchell, the shale fracking pioneer, got help from the government, including in the deployment of a horizontal well and microseismic mapping.

The government did not always get it right. In fact, research into fracking initially took a back seat to efforts to produce "synthetic fuels" from things like "oil shales" -- which to date have delivered little in terms of cost-effective energy.

The government could also stand in the way. Price regulation was a significant barrier to investment into "unconventional" gas deposits until it was freed during the Reagan administration.

Of course, the government assistance would have come to nothing without private entrepreneurs who took risks and followed market signals. Fracking was mostly reserved for gas until gas prices started falling a few years ago, shifting producers' efforts to oil, which could be exploited using similar technologies.

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