Domestic energy brightening U.S. economic outlook
ONE of the reasons for America's industrial might in the last century was that we had cheap, readily available energy. Domestic coal and oil fueled the economic engine.
But oil supplies dwindled, forcing us to depend on overseas production, and much of the easy-to-reach coal was mined out. Ever-tightening environmental regulations have made it harder to produce coal and reach off shore oil.
Manufacturing, a pillar of the economy and long a source of good jobs, declined or migrated elsewhere.
However, there are encouraging signs that America is again about to flex its considerable economic muscle. The onset of the revival can be found, once again, in cheap energy. This time it's unconventional oil and natural gas production.
Horizontal drilling and hydraulic fracturing now make it possible to reach previously isolated reserves of oil and natural gas. A new report by the consulting firm IHS finds that these recently accessed sources are beginning to have a dramatic effect on the nation's economy and standard of living.
"Unconventional oil and gas activity increased disposable income by an average of $1,200 per U.S. household in 2012 as savings from lower energy costs were passed along to consumers in the form of lower energy bills, as well as lower costs for all other goods and services," the report said. That figure is expected to rise to just over $2,000 by 2015.
IHS says the impact of the cheap, additional fuel supplies are being felt throughout the economy. Our trade deficit is declining, the chemical industry is coming back and manufacturing is beginning to return.
The Wall Street Journal reported last month, "After more than a decade of losing ground to China and other export powerhouses, U.S. manufacturers are finally showing signs of regaining a competitive edge."
Here are a couple of other key findings from the IHS report:
We've been hearing a lot over the last couple of years about how fracking and horizontal drilling are a game-changer for some regional economies, including West Virginia. Much of the evidence supporting that claim has been anecdotal.
However, it now appears the economic impact is, and will continue to be, even greater than first believed.
"Anyone who doubts the reality of this is not paying attention," said John Larson, vice president of IHS and one of the leaders of the study.
Of course, none of this will come as good news to the anti-carbon crowd, which wants to stake the country's energy future on the questionable and negligible impact of alternative fuels, such as wind and solar.
And feel-good affiliates in Washington will continue to prop up those industries with luxurious subsidies.
In the meantime, however, the rest of country will be getting on with the business of using new technologies to capture these viable and plentiful energy sources that make America work.
Kercheval is host of TalkLine, broadcast by the MetroNews Statewide Radio Network from 10 a.m. to noon Monday through Friday. The show can be heard locally on WCHS 580 AM.