D. Dowd Muska

 

Oil and Gas to the Rescue

October 31, 2013

The dot-com implosion. Thousands butchered on 9/11. Quagmire in Afghanistan. The expensive, bloody, and wholly unnecessary invasion of Iraq. The nastiest recession since the Great Depression. No progress on family fragmentation and the social pathologies it spawns. The worst presidential duo since Johnson and Nixon. A tripling of the national debt. The decades-long campaign against a once-functioning healthcare marketplace performs its coup de grâce.

America is having a horrible 21st century. Isn’t it time for some good news?

Here’s what could be the only item on the solace side: energy. But the blessing isn’t a long-overdue arrival of the “renewables” so cherished by the nation’s ignorant elites. Energy isn’t being revolutionized by wind turbines, solar panels, and hydrogen-powered fuel cells -- its new reality is dawning through abundant petroleum and natural gas.

Between August 2008 and August 2013, production of crude soared from 5 million to 7.5 million barrels per day. That’s up 50 percent in five years, a pace that the PIRA Energy Group recently concluded was “greater than the sum of the growth of the next nine fastest growing countries combined and … covered most of the world’s net demand growth over the past two years.” Amazingly, sometime in the near future, the U.S.-Canadian economy will produce all the transportation fuels it consumes.

Production growth has been impressive for natural gas, too. It was 28.6 percent between July 2005 and July 2013. The Associated Press reported that a single formation, the Pennsylvania-centered Marcellus, “now produces more natural gas than Saudi Arabia, and that glut has led to wholesale prices here that are about one-quarter of those in Japan.” The U.S. will soon be an impressive natural-gas exporter.

“Fracking,” maligned by brainless busybodies such as Yoko Ono, Mark Ruffalo, and Susan Sarandon, is undergirding the American economy. The far-left Progressive Policy Institute’s “Investment Heroes” report tracks the nonfinancial companies that make the most capital expenditures domestically. In 2012, six corporations in the oil-and-gas sector -- ExxonMobil, Chevron, Occidental, ConocoPhillips, Hess, and Enterprise Products Partners -- made the list, investing $36.3 billion. The same six reappeared in the 2013 edition, this time spending $44.9 billion. The hydrocarbon giants increased their share of the top 25 “hero” firms’ total investment from 26.7 percent to 30 percent.

Hydrocarbon-extraction employment is, quite understandably, surging. The Great Recession’s job trough bottomed out in February 2010. Since then, national employment has grown by a subpar 5.4 percent -- so unimpressive that the country has yet to reattain its January 2008 peak of 138.1 million jobs. By contrast, work in the oil-and-gas industry has risen by 26 percent since February 2010. It is more than 40,000 positions above its level of January 2008.

“If you can pass a drug test and get a commercial driver’s license, you can get $80,000 in one phone call,” a Texas banker, referring to opportunities in the Eagle Ford, told Bloomberg in March. Earlier this month the Pittsburgh Business Times noted a Raymond James finding that “between 2005 and 2012 almost 90 percent of the job growth in Pennsylvania … came from oil and gas jobs in the upstream and midstream.”

Fuels produced, investments made, job offers extended -- it’s all good. But the most enjoyable facet of the boom has been the debunking of decades of dunderheaded, hysterical predictions by politicians, energy bureaucrats, legacy-media personalities, nutty professors, and eco-alarmists.

M. King Hubbert, the Pontiff of Peak Oil, proffered his dire prognosis a half-century ago. Similar warnings had predated the geologist’s doomsaying, but most, mercifully, went ignored. After Hubbert, unlimited-government types, always hustling for an impending “crisis” that requires their brilliance and leadership, hyped the resource-depletion bogeyman. In 1977, the Federal Power Commission’s Gordon Zareski told Congress that natural-gas production would “continue to decline, even assuming successful exploration and development of the frontier areas.” Two years later, the CIA panicked over “the limited nature of world oil reserves,” and predicted that “output must fall within a decade ahead.” The mantra never changed. In a breathless 2003 Time piece, Donald R. Barlett and James B. Steele wrote that the U.S. was “running out of energy.” Natural gas, the Pulitzer-winning journalists declared, was “in scarce supply,” and petroleum production was “winding down.”

It was all nonsense, crafted by men who never deserved platforms from which to spout their ignorance of resource economics. Today, the revival of America’s hydrocarbon sector serves as a vital bulwark for a wounded and demoralized nation. Something to smile about while the Land of the Free endures a lengthy losing streak.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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