How Fracking Has Transformed the US Economy: The Role of Oil

The American Energy Revolution

Since 2008, America has shifted from being a dire case of energy importation to becoming the world’s largest producer of crude oil and natural gas.
This remarkable transformation has fostered a significant industrial revival across the United States, particularly in the petrochemical corridor that stretches from Texas to Louisiana.

The once-struggling “Rust Belt,” spanning Pennsylvania to Ohio, is rejuvenating as the “Plastics Belt.” According to the American Chemical Association, the U.S.
chemical industry now exports an astounding $180 billion annually.
The shale oil boom has sparked 351 projects since 2010, drawing in a whopping quarter-trillion dollars in global investment solely in petrochemicals.

Political Dynamics

In 2019, Kamala Harris advocated for a fracking ban, only to realize that such a stance could alienate potential voters.
Winning Pennsylvania’s 19 electoral votes is critical due to the vast Marcellus Shale deposits.
After serving as Vice President for over three years, she adjusted her viewpoint, acknowledging to CNN, “We can grow a clean energy economy without banning fracking.”

Global Energy Landscape Shift

Fifteen years ago, the U.S.
was on track to become the largest importer of liquefied natural gas (LNG).
This position would have severely hindered U.S.
assistance to Europe amid the Ukraine crisis.
Rather than competing for dwindling global supplies, the U.S.
has surpassed Qatar, becoming the biggest LNG exporter.
This shift has effectively compensated for the significant loss of Russian gas supplies to Europe.

Preventing a Dystopian Crisis

Without fracking, Putin’s energy blackmail could have succeeded, plunging Europe into a perilous state of gas shortages, chronic blackouts, and harsh winters, risking industrial collapse.
American shale industries have fundamentally altered the global oil market.

Back in 2008, the so-called “American century” appeared to be fading.
With the financial system in disarray, General Motors on the verge of bankruptcy, and a weakening dollar, U.S.
crude production had plummeted to 5 million barrels per day, requiring nearly 10 million barrels to satisfy demand, resulting in a current account deficit equivalent to 6% of GDP.

The specter of exorbitant oil and gas prices has been avoided.
The U.S.
became a net exporter of oil in 2020, a milestone not reached since 1949.
Today’s production has hit an all-time high of 13.3 million barrels per day, with projections suggesting this could rise to 14 million in the coming year as the Permian Basin in Texas outpaces Saudi Arabia’s Ghawar reserve.

The Ongoing Energy Challenge

Although the OPEC-Russia cartel has cut production to keep oil prices above $75 per barrel, it struggles to maintain close to $100, necessary for fiscal balance.
U.S.
producers can swiftly respond to rising global demand, effectively preventing significant spikes in oil prices and minimizing dependency on autocrats.

Technological advancements have revolutionized extraction processes, increasing efficiency and making U.S.
oil competitive against OPEC nations.
Exxon reports that production costs in the Permian Basin are below $35 per barrel.

Experts underestimated this revolution back in 2008 when the International Energy Agency hardly mentioned shale.
They made similar miscalculations with renewable energy, failing to accurately predict cost reductions and global expansion.

With an abundance of affordable energy, the U.S.
has emerged from the 2008 crisis, leaving China caught in a dysfunctional model of Leninist capitalism.
The coming years will hinge upon the race towards clean technology, and with the Inflation Reduction Act, the U.S.
appears poised to succeed in this new challenge.

Read more on America’s fracking revival.