The Daily Planet #45: The Petrostate, Part 6

And to round out this week, we will end with a brief on the latest Petrostate, i.e., the United States. I am being tongue in cheek, for the U.S. Economy is too diversified to be a Petrostate, but it sure looks like it's a bimodal economy - a high value knowledge economy centered on Wall Street and Silicon Valley and a commodity economy centered around oil, natural gas and agricultural commodities.

There was a time when I used to hear the term "Peak Oil" all the time - that we would run out of oil soon. The fracking revolution made that term a lot less relevant as can be seen in this graph (note the correlation between the decline of the use of "Peak Oil" and the roll out of shale oil and gas), and its fracking that has pushed the US firmly into the Petrostate camp.

The shale revolution transformed the American economy by turning the United States into the world's largest producer of crude oil and natural gas. This surge in domestic energy production, driven by advances in hydraulic fracturing and horizontal drilling, significantly reduced America's dependence on foreign oil, shifting the country from a major importer to a net energy exporter by 2019. The boom bolstered economic growth, adding about 1% to GDP between 2010 and 2015, and improved the trade balance by decreasing imports and increasing exports.

It also lowered domestic energy prices, freeing up consumer and business spending. Regions rich in shale, like northern Pennsylvania's Marcellus formation, experienced job growth and economic revitalization during a period when much of the country faced recession and unemployment. Moreover, the shale boom insulated the U.S. economy from global oil price shocks, stabilizing inflation and growth despite volatile international markets.

Environmentally, while fracking has drawbacks such as methane leaks and waste, it contributed to a shift from coal to cleaner natural gas, reducing carbon emissions in power generation. However, the abundance of shale resources risks slowing investment in renewable energy innovation - in fact, a good way to read the Trump administration's anti-climate policy is as support for fracking.

The shale revolution helped make America’s economy great

But will the country’s oil riches discourage a similar revolution in renewables?