When President Trump spoke before a group of energy workers in Louisiana recently, he pointed out the role energy plays in our robust economy.
“In Louisiana, Texas, New Mexico, Colorado, North Dakota, Ohio, Pennsylvania, and states all across our land, workers like you are lighting up our homes, powering our factories, and reducing energy costs for hardworking American families,” the president said. “You are not only making our nation wealthier, but you are making America safer by building a future of American energy independence.”
The unsung hero of this energy revolution is shale—the source rock for our now massive store of oil and natural gas. And the revolution will continue—unless it’s derailed by short-sighted and infeasible policies like those in the Paris Agreement and the Green New Deal.
The economy is picking up steam. Fears of a recession have faded. Unemployment has hit a 50-year low, and it could go even lower. Wages are rising, and consumer confidence is sky-high.
Energy is driving all of those indicators. Cheap, abundant, concentrated energy fuels a manufacturing boom. Consumption of electricity has a direct correlation with economic growth. Our GDP, indeed, is rising at a brisk pace.
But it’s not just any energy that fuels the boom—it’s oil and gas. As Mark P. Mills points out, in spite of what we hear about a “new energy economy,” traditional fossil fuels continue to outpace the intermittent, erratic renewable energy in wind and solar.
“That fact helps explain why shale oil and gas have added 2,000% more to U.S. energy production over the past decade than have wind and solar combined,” he writes.
The growth of renewable energy sounds impressive, until you look at the actual numbers.
The Energy Information Administration projects that the amount of electricity produced from wind and solar in the U.S. will more than double from 2020 to 2050 but that these two sources will still only account for 7.7% of total U.S. energy production in 2050. Other renewable sources, such as hydroelectric and biomass, are not projected to grow meaningfully, which means fossil fuels and nuclear will still make up about 85% percent of the energy we produce and consume in 2050.
And the growth of renewable energy such as wind and solar comes at great cost—through subsidies, dependence on back-up generation and a less-reliable electrical grid.
Compare these numbers to traditional energy sources. Oil and gas production has exploded in the years since U.S. petroleum engineers developed the tools and techniques that we now call fracking. The U.S. has more than doubled crude oil production in the last decade, from 5 million barrels per day in 2008 to more than 11 million barrels per day in 2018.
Natural gas production is also up, from about 47 billion cubic feet per day in 2005to an estimated 90 billion cubic feet per day in 2019; that’s an increase of 91 percent.
Any booming industry requires workers, and according to the American Petroleum Institute, the oil and gas industry now supports more than 10.3 million U.S. jobs and nearly 8 percent of the U.S. economy. And these are good jobs. The median salary for a Phillips 66 refinery worker is nearly $200,000 per year. Adding in the utility sector, and the median pay for workers is $117,000—the highest of any sector in the S&P 500.
Other countries benefit as well. We will break new records in oil and natural gas exports in 2019, particularly as new LNG (liquefied natural gas) export facilities open on the Gulf Coast. But it’s not just oil, gas and petroleum derivatives we’re exporting. As U.S. Energy Secretary Rick Perry points out, when the U.S. exports LNG, it’s exporting freedom—less dependence by European nations on Russia, for example, which has never hesitated to use its energy stranglehold to “threaten and extort other countries,” according to U.S. Sen. John Barrasso, R-Wyoming.
Cheaper energy, a booming economy and freedom—these are what the shale revolution has delivered. The shale revolution happened because American companies had the incentive and freedom to innovate thanks to our robust energy markets.
It’s vital to our nation now that we allow the boom to continue. Subverting success, through misguided policies such as carbon taxes (which only reduce energy consumption by making it more expensive) or infeasible renewable energy mandates will only hurt American families.
Instead, let economic freedom power our future.
This commentary originally appeared in RealClearEnergy on May 24, 2019.