Outlook for Economy’s ‘Master Resource’ Bright
Yesterday my colleague Marlo Lewis and I sat down for a Facebook Live interview (archived here) on this week’s big event, Human Achievement Hour, our annual celebration of innovation and progress. Because of the role of energy as the “master resource” in the economy (and of Marlo’s own extensive expertise in the field), much of our conservation revolved around how important supplies of affordable energy are to human health and well-being.
On the eve of this year’s Human Achievement Hour, there’s some pretty good news to be had when it comes to energy development. The U.S. has become a net exporter of natural gas for the first time in 60 years, the Environmental Protection Agency is no longer “weaponizing” energy policy to kneecap politically disfavored producers, and recent research is confirming that the optimist view of resource economics in the 20th Century was right after all. Not all prospects are rosy, of course—rising trade tensions, in particular with China, could erode some of the gains we’re seeing via retaliatory tariffs and other state-directed economic policy. But overall, the outlook for steady supplies of affordable energy is pretty positive.
In addition, relevant environmental indicators have also seen improvement. As our friend Mark Perry of the American Enterprise Institute pointed out in a syndicated op-ed recently, air quality has seen significant improvements in the U.S. in the last decade, driven in no small part by increased (and therefore increasingly affordable) supplies of natural gas:
According to the Energy Information Administration, there has been a sharp reduction in power-plant emissions over a 10-year period. Since the start of the shale revolution in 2006 and leading up to 2016, annual sulfur-dioxide emissions dropped 81 percent, from 9.5 million metric tons to 1.8 million tons, and nitrogen oxides fell from 3.8 million metric tons to 1.63 million tons, a reduction of 57 percent.
And over the same period, annual carbon-dioxide emissions dropped 22.5 percent, from 2.5 billion metric tons to 1.9 billion tons. Today carbon-dioxide emissions from power production are at late-1980s levels. Think about it: Even as electricity production has risen, carbon emissions fell.
These numbers should bring home a clear message: The fossil fuel revolution in the United States is profoundly changing not only the economics of oil and gas production but also the environment. When it comes to electricity, the economics increasingly favor low-cost, abundant natural gas.
For even more analysis, see the recent op-ed from the Global Energy Institute’s Dan Byers, “Energy policy in Trump era bodes well for Americans and business.”