Shale Boom Has Advanced U.S. Hopes of Energy Independence - What Are the Implications?
Now, “energy independence” is back in vogue, not as a joke but as a serious topic of political discussion. It’s not likely that the United States will actually become energy independent in the foreseeable future, but it will certainly become energy a-lot-less-dependent.
The surge in production and the fall in imports would in themselves call for recasting the political discourse. But the economic impact of this revolution is broader even than those numbers suggest. A recent study by IHS, the energy consulting firm where I work, estimates that 2.1 million jobs were supported by this energy boom in 2012, and we project that to rise to 3.3 million jobs by 2020. It meant an additional $74 billion in federal and state revenues in 2012, and, owing to lower energy costs, an increase of $1,200 in average household disposable income across the United States. With U.S. natural gas prices a third of those in Europe, it is also making the United States a much more competitive place for industry, helping to power what President Obama has called a “renaissance in American manufacturing”—many tens of billions of dollars of new investment going into manufacturing facilities. And the increase in domestic oil production has reduced the annual U.S. trade deficit, at current prices, by about $85 billion.
These economic opportunities have captured the attention of such governors as Republican John Kasich of Ohio and Democrat John Hickenlooper of Colorado. In addition to promising sound state regulation of drilling, they have emphasized what this means in terms of jobs, industrial development, revenues both for the state and for farmers struggling to hang on to their land, and revitalization of decaying rural areas that are losing the next generation. As Kasich put it, development of the state’s Utica Shale will help parents get their grown children “out of their attic and actually get a job.” It’s been a long time since anyone in American politics—at least outside of places like Texas and Oklahoma—talked about oil and gas in terms of jobs here at home.