Not a moment too soon........................

There are many reasons why the United States has succeeded economically and politically over the past several hundred years.  At the risk of riling my history professors, here are a few:  abundant land, abundant natural resources, a growing and diverse population with a sturdy work ethic, a bias towards educating all, a Constitution that historically and generally caused the government to leave people alone, friendly neighbors, big oceans separating us from our enemies, a system of enforceable contracts and property rights, the rule of law, the anticipation of, and desire for, growth, and finally, cheap and plentiful sources of fuel.  Things and people change over time and advantages wane.  After decades and decades of less than $20 per barrel oil, OPEC and the 1973 oil embargo took away cheap fuel.  We are still coming to grips with expensive energy. But............


Lawrence Solomon has an essay up at the Financial Post that suggests some changes are brewing.  The world may soon be awash in that cheap fuel again.  Heads up OPEC...........


Some excerpts:

Thanks to fracking, the U.S. has suddenly become the world’s largest producer of natural gas, creating a massive glut that has more than halved the price of natural gas. Those liquefied natural gas ports that the U.S. was building to import gas will now be used to export gas.

A glut will soon also materialize in Europe, another major natural gas importer, where massive finds of shale gas in the U.K., in France, in Poland, in Ukraine and elsewhere will be slashing the cost of energy. So too with China and other major energy importers — the world is now awash in shale gas and will remain so for many decades, if not centuries.....

Although shale oil technology is still in its infancy, much of the U.S. shale oil can be developed inexpensively, at a cost comparable to the US$50 to US$60 per barrel cost of tar sands, which has itself been dropping. The trend down in shale oil costs is likely to continue over the coming years. Israel, which has some 250-billion barrels in one basin near Jerusalem alone, an amount comparable to Saudi Arabia’s reserves, expects to develop its oil at a cost of US$35 to US$40 per barrel. Should the world price of oil drop to this level — which happens to be the average price over the last two decades — the halving in oil prices will have mirrored that of natural gas. In the process, today’s Middle East energy exporters will have been bankrupted and their autocrats ousted.