Unions Killing the Goose

Article excerpt

Four decades ago, the Arab oil embargo consigned Americans to gas lines. Odd-even rationing became routine, and everyone with a passing interest in energy policy heard regular predictions that the planet was nearing "peak oil."

We've been told forever that we're "running out of resources," that we're facing a future of shrinking options, that we'd better change our ways and oh, by the way, our friends in the "green" movement will tell us exactly how our ways must be changed.

Which is why this month, the greens no doubt reacted in horror at the International Energy Agency's latest forecast on oil production.

Forget about peak oil. What the future portends is energy abundance. Within eight years, the IEA says, the United States will overtake Saudi Arabia as the planet's largest oil producer. All those predictions about running out? The ever-gloomy greens ignored the most important resource-production factor of all: human ingenuity.

New drilling techniques involving hydraulic fracturing -- fracking -- have produced a gusher of oil and natural gas from shale formations in several states, mainly in Texas, North Dakota, Ohio and Pennsylvania. The boom has added tens of thousands of new jobs and more revenue for state, local and federal governments.

True, the IEA's prediction could be too optimistic, just as the environmental-disaster scenarios of the last 40 years have been too pessimistic. And one risk is that the Obama administration will do everything in its power to curb the new drilling techniques, denying much of this new bounty to the nation.

Yet while there's no way of knowing how long production can increase at the current exponential rate, the new oil and gas is already creating geopolitical waves.

"The big thing is a change in the dynamic," said economist Chris Kuehl of Kansas City, Kan.-based Armada Corporate Intelligence.

"Back in the embargo days, OPEC was responsible for about 70 percent of world oil," Kuehl said. …