by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
Over the past decade, innovation has upended the energy industry. First came the shale revolution. Starting around 2005, companies began to unlock massive new supplies of natural gas, and then oil, from shale basins, thanks to two new technologies: horizontal drilling and hydraulic fracturing (or fracking).
Engineers worked out how to drill shafts vertically and then turn their drills sideways to travel along a shale seam; they then blasted the shale with high-pressure water, sand, and chemicals to pry open the rock and allow the hydrocarbons to flow. These technologies have helped drive oil prices down from an all-time high of $145 per barrel in July 2008 to less than a third of that today, and supply has become much more responsive to market conditions, undercutting the ability of OPEC, a group of the world’s major oil-exporting nations, to influence global oil prices. …
Already, huge benefits from the technology revolution in energy are reaching consumers. The 92 million barrels of crude oil that the world economy consumes every day cost about $2 trillion less annually than that amount did a decade ago. In the United States, the energy revolution has helped sustain economic growth: from 2008 to 2014, lower prices saved the average household over $700 a year. The era in which energy policy focused on the security of raw resource supplies—access to barrels of crude oil, tons of coal, and volumes of natural gas—is over. Today, the task for policymakers is to manage the implications of a new world of cheap, plentiful energy.
The report concludes with boilerplate about the Paris agreement and the need to cut emissions because climate change, but in fact energy-based emissions in North Carolina and the U.S. are down this century primarily because of this technological revolution.
The Paris agreement wasn’t necessary; free markets and the restless genius of the entrepreneurial spirit are providing the long-sought results that are cutting energy costs, energy emissions, and energy dependence on cartels.