America may yet “frack” its way to prosperity.
According to Dow Chemical, in the past two years, manufacturers have poured $90 billion in U.S. investments into natural gas, sparking what the Financial Times calls a “shale revolution” that “appears to be driving the country’s industrial renaissance.”
The multi-billion dollar corporate investments in shale gas have helped spur manufacturing advancements in horizontal drilling and hydraulic fracturing (also known as “fracking”) technologies designed to access trapped gas lodes.
“This revolution is creating great opportunities to increase manufacturing capability, and has tremendous potential for economic impact and job creation,” said Phillips 66 chief executive Greg Garland.
The flood of U.S. investment cash in shale gas has caught Europe flat-footed, says the Financial Times:
The U.S. investment boom has caused concern among manufacturers in Europe, who fear they will find it difficult to compete in energy-intensive sectors. The British government set out an attempt to launch its own shale gas industry last week to help revive the moribund economy.
The shale boom is reinforcing other trends that are also increasing the competitiveness of U.S. manufacturing, including relatively slow wage growth.
Indeed, last week the United Kingdom cleared the use of “fracking.”
Whether the U.S. natural gas revolution will come full bloom remains to be seen. But Mr. Obama has already displayed a level of political flexibility on fracking, given its economic promise. In May, Mr. Obama quietly eased up on important fracking regulations that would have slowed energy exploration in Ohio.
Likewise, Mr. Obama’s liberal base has shown a willingness to bend its environmental opposition to fracking when profitable. In 2008 and 2009, the leftist think tank Center for American Progress accepted $453,250 from natural gas billionaire T. Boone Pickens.
Some environmentalists seem to have looked the other way and given Mr. Obama a pass on his fracking stance. “I understand Obama’s position, politically. The regulations have been quite a bit less than I would desire, but they would be infinitely [less] under Republicans,” says Dave Simons, former chairman of the Sierra Club conservation group’s Ohio panel on fracking. “Economic times are tough. There is big money in this, and … [people] are willing to take a chance on this.”
The future of the natural gas revolution also stands to be affected by a study currently being conducted by President Barack Obama’s Environmental Protection Agency (EPA) on “hydraulic fracturing and its potential impact on drinking water resources.” The EPA’s final report is slated for release in 2014.