Changing Prices, Changing Markets
The technological change in energy economics will have far-reaching consequences. More than half of the U.S. trade deficit is attributable to oil imports. And with a relatively free market in energy, U.S. prices are sensitive to changes in supply, downward as well as upward.
The price of natural gas is dragging down the price of other fuels. It has prompted real profit-seeking investments in chemicals. Cheaper energy heralds larger profits in manufacturing, services, and exports.
The new American production technologies won't merely improve the ability to find and produce oil in the U.S. Technology advances are more rapidly diffused around the world than ever before, and nowhere more than in energy production, long since a globalized industry. Other countries can find opportunities as great as those in the U.S. They can make their own contributions to the world's energy supplies.
Like the production of food by the Green Revolution, technology is on the way to making energy so abundant that only government policies restricting production can make it expensive.
Part II will address the government policies that restrict energy production.