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July 17 2012

The Most Important Revolution You Likely Haven’t Heard About

Vicki E. Alger

Harvard University’s Leonardo Maugeri, Research Fellow, Geopolitics of Energy Project, recently released an important study that finds:

 

Contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption. This could lead to a glut of overproduction and a steep dip in oil prices. …The most surprising factor of the global picture, however, is the explosion of the U.S. oil output. Thanks to the technological revolution brought about by the combined use of horizontal drilling and hydraulic fracturing, the U.S. is now exploiting its huge and virtually untouched shale and tight oil fields, whose production  – although still in its infancy  – is  already skyrocketing in North Dakota and Texas. …The shale/tight oil boom in the United States is not a temporary bubble, but the most important revolution in the oil sector in decades. It will probably trigger worldwide emulation over the next decades that might bear surprising results  -  given the fact that most shale/tight oil resources in the world are still unknown and untapped. What’s more, the application of shale extraction key-technologies (horizontal drilling and hydraulic fracturing) to conventional oilfield could dramatically increase world’s oil production.   (See pp. 1-2 and 6 of the pdf study. Emphasis added.)

 

But barriers do exist. Maugeri notes, “The U.S. champions free trade and free access to global oil for any country, but oil cannot move freely throughout the United States, or be exported from the country.” (p. 55) Another concern is environmental risk. While “there will always be a small level of risk, historical evidence and data suggest that the risks are confined to a few cases and even those may be minimized by using the best practices that serious companies apply,” says Maugeri .(p. 61) Absent a concerted industry effort to address those fears, “that could  create much more onerous regulation in the near future  that could also affect the actual U.S. shale oil production.” (p. 61) Not to mention how such failure could fuel opposition by environmentalist groups. (See the Heritage Foundation’s excellent article on this subject here.)

“[T]he truly important impact of the U.S. Shale/Tight Oil Revolution” according to Maugeri is its impact on U.S. GDP and employment. By some estimates, this revolution could increase GDP by more than $620 billion and create nearly 4 million jobs by 2020. (pp. 62-63)

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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