Energy Boom Ripples Through US Economy
CNBC
Published: Monday, 25 Mar 2013 | 10:15 AM ET
By: John W. Schoen, NBC News
Excerpts
The boom in new oil and natural gas flowing through U.S. pipelines is beginning to ripple through the wider American economy.
Booms, Busts and Booms
Since the first gusher of oil spewed from of the ground above the Spindletop salt dome outside Beaumont, Texas, more than a century ago, the U.S. energy industry has enjoyed its share of booms and busts. After peaking in the early 1970s, U.S. oil and gas production began to decline as thousands of depleted wells were shut down. The U.S. rapidly became dependent on foreign suppliers to fuel its economy.
About a decade ago, advanced oilfield production technologies like hydraulic fracturing, or "fracking," and horizontal drilling began to reverse that trend. Many of the now-bountiful fields being brought back on line were mothballed long ago when the remaining "tight" oil and gas deposits were considered too costly or technically difficult to produce.
"It is a sizeable opportunity," said John Larson, an economist with IHS Global Insight. "It's a game changer."
America's growing energy independence also has been fueled by gains in efficiency: U.S. vehicles are squeezing more mileage from every gallon of fuel, and high-tech heating and cooling units and green building techniques and materials have cut energy bills for commercial and residential buildings by 10 percent since 2005.
Challenges remain
To be sure, there are forces that could delay – or even derail – the ongoing energy boom. The drop in natural gas prices has already slowed production of some projects that become too costly when gas prices are too low.
Lower oil prices could have the same impact, but it's not clear that added U.S. supplies will be sufficient to make a dent in global oil prices, especially if OPECproducers like Saudi Arabia throttle back on supplies to maintain current prices.
The original article was published by NBC
