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THE AMERICAN OIL & GAS INDUSTRY IS RESCUING THE OBAMA ECONOMY
In Comeback: America’s New Economic Boom, author Charles Morris refers to “the new X-factor, the American energy advantage.” The “game changer”—shale oil and gas technology and production—has put the United States and Canada in the world’s leading economic saddle. Noted expert Daniel Yergin concurs. “Abundant low-cost energy is stimulating a revival of manufacturing in the U.S. as well as well as increased American economic competitiveness,” he states, countering what otherwise is “a time of stubbornly high unemployment.”
Yes, technologically unlocked oil and gas has created an energy revolution and industrial bright spot in the otherwise dim Obama era. By 2020, according to Yergin, shale gas alone is expected to support 4 million jobs (versus 1.7 million today). And the United States is expected to surpass Saudi Arabia as the world’s leading oil exporter, according to the International Energy Agency. Natural gas, meanwhile, is on course to overtake coal as the second largest source of energy worldwide by 2025.
Renewables like wind, solar, and ethanol are no substitute for the above boom of carbon-based energy. In 2011, renewable energy accounted for less than 10 percent of total U.S. consumption—about the same as sixty years ago. And should all-out government subsidies and mandates recede or end, all renewables except for hydropower will shrink precipitously.
That’s why the surging supply of natural gas, the least carbon-intensive of traditional energy sources, is welcomed by all except a deep-ecology fringe. Natural gas produces half as much carbon as coal and a third the quantity of nitrogen oxides. The more prevalent the use of natural gas, the cleaner the air across America.
Expanded oil and gas production benefits state and local government as well. North Dakota, which welcomed the industry’s new technologies, saw its taxable sales and purchases jump nearly one-third in 2012 compared to the year before. Oil and gas tax receipts for the current biennium came in at $3.8 billion, leaving the Roughrider State with a budget surplus of $1.6 billion.
The energy boom is also putting money in the pockets of North Dakota residents. On average, weekly wages have increased 40 percent since 2009. With a 3.3 percent unemployment rate statewide, North Dakota is attracting new residents in droves, and the state’s construction, financial, insurance and real estate sectors all grew significantly in the last year.
Pennsylvania, too, has looked to energy as a new source of vitality. In the teeth of the Great Recession, the state saw thousands of new wells drilled. In 2010 alone, natural gas development in Pennsylvania supported almost 140,000 jobs.
Pennsylvania residents who lost their jobs when sawmills, quarries and manufacturing shops closed for good are finding work in industries related to oil and natural gas extraction. These new energy jobs are good ones, too; a Penn State study found that fracking-related jobs in Pennsylvania paid $62,000 on average, as much as $25,000 more than the state average. Many of these in-demand energy jobs require little more than a high-school diploma. In a state where more than one in ten residents are stuck below the poverty level, this potential is life-changing.
The positive spillover effects of the energy boom in Pennsylvania are large and growing. Another Penn State study found that small local businesses outside the energy sector are among the chief beneficiaries. In Bradford County, a rural area where hundreds of new wells have been drilled since 2008, one-third of all local businesses saw increased sales directly attributable to drilling activity. Restaurants, financial services businesses and the wholesale trade and business-service sectors all reported surges in revenues.
The above energy boom is a net creator of tax dollars, not a net user of tax dollars as the politically correct energies of wind, solar, and ethanol. Better yet, the energy-industry success is contributing to a more secure retirement future for millions of Americans with private and public pensions holding about half of all shares in U.S. oil and natural gas companies.
A study for the American Petroleum Institute found that between 2005 and 2008, energy stocks made up 3.9 percent of public pension holdings in Michigan, Missouri, Ohio and Pennsylvania but accounted for 8.6 percent of their returns.
The United States has always been blessed with bountiful resources and entrepreneurial citizens, of which the oil and gas boom is the latest example. The myriad benefits from the New Prometheus have the potential to continue to advance the American dream for all of us as consumers, producers, and investors.