Here is a great comment from Mr. Greg Arnot on an article by Daniel Yergin:
Free enterprise seems to generate its own luck. Millions of free people stabbing out in seemingly random directions, each acting in his or her own self interest, seem to always find a way.
Free enterprise is able to focus chaos in order to meet our needs and exceed our expectations.
How’s that for a semester of economics compressed into 50 words?
Mr. Yergin’s article, The Real Stimulus: Low-Cost Natural Gas, discusses the boost to the economy of low-cost natural gas from shale.
Look at the dramatic change in just a few years:
Half a decade ago, it was assumed that the U.S. would become a large importer of liquefied natural gas; now the domestic natural gas market is oversupplied, thanks to the ability to produce shale gas through hydraulic fracturing and horizontal drilling technologies.
The stimulus impact on the economy is far-reaching. His research indicates 1.7 million jobs have been created by the new sources of shale oil.
There is a geopolitical impact. He points out that increased U.S. production of oil is roughly comparable to 80% of Iran’s production, which means that the world can block purchases from Iran without disrupting the price of oil. Cool.
There is a multiplier effect from the impact on U.S. manufacturing:
Domestically, growing natural gas supplies provide a foundation for a manufacturing renaissance, at least for industries for which energy is an important feedstock or where energy costs are significant. Chemical companies have been leaving the U.S. for years in the search for lower-cost countries in which to operate. Now they are planning to invest billions of dollars in new factories in this country because of inexpensive and relatively stable natural gas prices.
When he was in China, he heard comments about the energy price advantage in the U.S. offsetting the (disappearing) labor price advantage in China.
Check out the full article.
Back to Mr. Arnot’s comment. You gotta’ love that first sentence – “Free enterprise seems to generate its own luck.”
I’m going to use that again, somehow.