Guess which country is the world’s largest oil producer. No, it’s not Saudi Arabia or Russia. It’s the United States, which passed Saudi Arabia in November of 2012, according to data from the federal Energy Information Administration and reported in Investors Business Daily.
In 2012 American domestic output rose by an astonishing 800,000 barrels a day. That’s more than total oil production in such middling oil producers as Argentina, and the greatest single-year increase in the United States since Edwin Drake drilled the first well in 1859.
That has consequences far beyond the oil patches of Texas, Alaska, and North Dakota. In 2006, the United States imported 60 percent of its oil. In 2013, that might well fall to 30 percent. That would mean roughly a $600 million turnaround in the balance of payments per day.
When I wrote yesterday about the growing unemployment in Europe, I noted that manufacturing in Europe was in real trouble, having been losing jobs every month for quite a while now.
Today Walter Russell Mead explains one big reason why: natural gas. Natural gas now costs about one-fourth as much in the United States as it does in Europe. The reason for that is, of course, fracking, which has been largely welcomed in the United States, except on federal land and such places as New York State. There Governor Andrew Cuomo would rather pander to the “environmentalists” who show up at expensive Democratic fundraisers in chic New York City venues than help out the deeply depressed upstate economy, which is sitting on trillions of cubic feet of natural gas.
The technologies of “fracking,” and horizontal drilling are rapidly transforming the world’s energy situation. These technologies make it possible to tap into vast deposits of both natural gas and oil in shale layers around the world. The United States is particularly rich in such deposits. American domestic energy production has been rising rapidly (and imports falling commensurately), while our carbon emissions have been falling to the lowest level since 1992, because natural gas is increasingly replacing coal as a fuel in electric generating plants.
And since energy is one of the most important of economic inputs, it is transforming the world’s geopolitics as well, much to the benefit of the United States and many of its allies (such as Canada and Australia) and much to the detriment of such countries as Russia, the Gulf States of the Middle East, and Venezuela.
Naturally, the environmental movement is outraged at these developments.
Anti-CO2 activists may have to find something else to give their lives meaning. The AP reports that “the amount of carbon dioxide being released into the atmosphere in the U.S. has fallen dramatically to its lowest level in 20 years, and government officials say the biggest reason is that cheap and plentiful natural gas has led many power plant operators to switch from dirtier-burning coal.”
So if you’ve been championing government action as the last best hope to save humankind from the big broil, you too should find a hobby: “Many of the world’s leading climate scientists didn’t see the drop coming, in large part because it happened as a result of market forces rather than direct government action against carbon dioxide.”
The Wall Street Journal has the umpteenth article today trumpeting the technological advances–primarily fracking–that are allowing oil companies to uncover and exploit vast, untapped fields in North America. This is leading a dramatic decline in our need for imported oil, especially oil imported from the Middle East. As the Journal notes:
By 2020, nearly half of the crude oil America consumes will be produced at home, while 82 percent will come from this side of the Atlantic, according to the U.S. Energy Information Administration. By 2035, oil shipments from the Middle East to North America “could almost be nonexistent,” the Organization of Petroleum Exporting Countries recently predicted, partly because more efficient car engines and a growing supply of renewable fuel will help curb demand.