“The Progressive Case for Fracking” – courtesy the Wall Street Journal

by Marilou Long on December 30, 2014

in Energy,Foreign Markets,Geopolitical,Recommended Reading

The breathtaking drop in the price of oil has been one of the biggest surprises of 2014.  This opinion piece in the WSJ today is a good summary of the forces driving the price of oil right now.  From the linked article:

As the American people and companies shift more of their consumption to cheaply produced domestic energy, the geopolitical leverage of oil-rich autocrats diminishes. A barrel of crude on Monday sold for less than $60, down nearly 50% since June when it went for $115. Take that, ayatollah.

This is a price drop made in the shale-rich heartlands of the U.S. Between 2007 and 2012, shale production in America jumped by more than 50% a year. In that time the shale share of total U.S. gas production rose to 39% from 5%. Last year the U.S. overtook Russia as the world’s leading energy producer; next year America is projected to overtake Saudi Arabia as the world’s biggest producer of crude oil.

One consequence is a massive fall in the price of oil just a few years after the words “peak oil” were being bandied around as gospel by environmentalists. Peak oil now looks like one of the most outlandish theories of our era. Rather than contract, the global supply of energy continues to diversify and expand, in no small part because of the boom in American shale.

This ought to put a smile not only on the faces of free-market economists, but liberals and progressives, too. As America becomes a net exporter of energy, shale could help topple some of the world’s worst regimes.

 

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