Thursday, February 14, 2013

The good, the bad, and the fracked

Here's something that hasn't received much attention in the mainstream media, but which may have a big impact on things going forward.

The U.S. appears to be on its way to energy independence.

Yes, American producers are pumping record amounts of oil, and large natural gas reserves have been opened up, thanks to the (controversial) technology of fracking, which enables access to reserves previously trapped in reservoir rock formations

While, it's always impossible to see all of the implications of this kind of development (remember the peace dividend?), we may see cheaper oil, effectively giving consumers a pay increase and spurring economic growth.

Lower transportation costs would boost profits for many businesses, and reduce the costs of maintaining America's military.

There might also be less need for foreign military bases and wars to protect middle eastern sources of petroleum, permitting a downsizing of U.S. armed forces.

All of this generates more U.S. tax revenue and frees up more of it for deficit and debt reduction, and spending on social programs.

The downside? Less urgency to move to renewable energy sources like wind and solar, and to design more fuel efficient cars. That would mean more greenhouse gases and the associated acceleration of climate change.

Canadian oil producers may need to look farther afield for customers too, torquing the pressure to build pipelines from the Alberta oil sands to ocean ports.

1 comment:

  1. Yes, the Canadian media has dropped the ball on this completely. That's why Alberta oil prices are plummeting right now (the so-called "bitumen bubble"). It won't be long until the U.S. won't need to buy our oil at all anymore. If we haven't got China as a major client by then, we are screwed. Without a pipeline to the coast, China can't be guaranteed.