Last year, the United States oil and gas industry grew at an astounding rate. Oil production increased by an awesome 2.2 million barrels per day. That exceeds the total production of all but eleven countries. By contrast, Nigeria, the biggest oil producer in Africa, pumped a little short of 2 million barrels per day last year. Total American production last year was about 12 million barrels a day, well above second place Russia’s 10.1 million. Meanwhile, natural gas production increased by a staggering 86 billion cubic meters. That’s about equal to the United Kingdom’s total annual consumption.
The economic implications of this vast increase are considerable. Oil prices have been going down in the last few months, and the price at the pump is following suit. Prices usually rise at this time of year as the peak summer driving season arrives. That puts more money in American pockets with which to buy other stuff. And as the supply of natural gas has increased, the price has dropped sharply. And so, demand has risen. The switch from coal to gas in electricity production (gas surpassed coal as the leading fuel for electric generating plants in 2015), for instance, is the primary reason why American carbon dioxide emissions are down by about 20 percent over the last 12 years. That’s a statistic that environmentalists should be celebrating, and it’s telling that they are not.
The geopolitical implications of America’s energy boom are even more profound. In 2007, U.S. natural gas companies began building liquid natural gas (LNG) terminals to import ever large quantities of LNG from such places as Trinidad and Tobago. Now they are ever increasingly being used to export LNG, and the United States is now a net exporter. By 2022, the United States will be a net energy exporter, and the volume of exports should continue to increase for years to come. This will greatly help the balance of payments. It will also make the United States, not Russia or Saudi Arabia, the swing producer, able to stabilize energy markets. There will be no more oil shocks of the kind the country experienced in the 1970s.
This is all possible, of course, because of the fracking revolution that swept over the American energy industry in the last 20 years. As Glenn Reynolds over at Instapundit likes to say, ‘Have you hugged a fracker today?”