North Dakota Leading The Way In America’s Economic Homecoming

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I’m not sure how many people understand just how profound an impact America’s shale oil and gas revolution will have on our nation’s economy, not to mention international politics.

US reliance on the Gulf for its oil – and its consequent need to maintain a dominant presence in the Middle East to keep the oil flowing – has been one of the constants of the post-1945 status quo. That could be turned on its head.

It’s been dubbed “the homecoming”. After decades in which the hollowing out of American manufacturing has been chronicled in Bruce Springsteen’s blue-collar laments, cheap energy is being seen as the dawn of a new golden age for the world’s biggest economy.

The reason is simple. The US is the home to vast shale oil and gas deposits made commercially viable by improvements to a 200-year-old technique called fracking and by the relentlessly high cost of crude.

Exploitation of fields in Appalachian states such as West Virginia and Pennsylvania, and further west in North Dakota, have transformed the US’s energy outlook pretty much overnight. Professor Dieter Helm, an energy expert at Oxford University, said: “In the US, shale gas didn’t exist in 2004. Now it represents 30% of the market.”

As I wrote yesterday, North Dakota is now supplying 12% of America’s total oil production (up from less than 1% a few years ago), and a much larger percentage of shale oil.

And oil is just one part of the picture. Shale gas, as I’ve pointed out before, is having a dramatic impact on energy markets. In fact, America’s startling decline in carbon emissions is due mostly to coal plants being replaced by cheaper natural gas plants on the nation’s power grids.

But, from an international perspective, the impact of America’s shale oil/gas surge may be the most interesting in that it means the US doesn’t have to care as much about what happens in the middle east. The region will still be important, but far less so given our lessening dependence on hydrocarbons from that region.

It’s a cynical truth that one of the few reasons we cared about the endless squabbling in the middle east was because of the oil. They had it. We need it. Because modern economies run on oil. But now we have it, and in quantities that could serve our needs for centuries to come.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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