That is the rough measure of the benefit the U.S. economy is estimated to receive by the end of this year thanks to the development of new supplies of oil and natural gas, according to a new analysis.
USA Today reported recently about a Merrill Lynch study that seeks to quantify just how much the new supplies of natural gas and oil from unconventional sources like shale – not to mention offshore production in the Gulf of Mexico – are adding to U.S. economic output.
The story notes that Merrill Lynch claims raw gains from domestic energy supplies were $900 million per day in April – a 1,300 percent increase from $70 million per day in January 2010. By the end of 2012, Merrill Lynch expects the daily gains from domestic supplies to be over $1 billion.
Unfortunately the report is not online, which is too bad because the authors provide valuable detail about what they see as the great economic contribution of the current energy revolution. They peg that contribution at 2.2 percent of U.S. gross domestic product – an astounding figure in a $15 trillion economy.
Opportunity for a new industrial revolution
Another way to look at how new production of oil and gas from unconventional sources like shale is transforming our economy comes from Clay Jenkinson, a scholar at Dickinson State University in North Dakota.
In a series of columns for the Bismarck Tribune, Jenkinson describes a tour of the Bakken oil fields he took to see how the latest drilling technology works and what it all means for his home state.
After noting that it wasn’t all that long ago in human history that mankind had mastered fire, he marvels:
Today, a guy with a joystick can direct steel well pipe 12,000 feet into the earth, and then TURN a 90 degree corner (with stiff steel pipe), so that, with the same joystick, he can feel his way to a 3-15 foot vein of oil bearing shale thousands of feet away from the turn. Think about this for a moment. We can send down a straw more than two miles into the earth, through some very dense and unyielding formations, and then turn a corner and wander laterally until we reach an exceedingly narrow formation that the entire population of North Dakota could never reach with shovels if they did nothing else for the rest of their lives.
Given that this technology is just beginning to unlock the state’s vast resources – perhaps 12-20 billion barrels (or 60 years’ worth) of recoverable oil in western North Dakota – Jenkinson dismisses the idea of a regional “oil boom.” That term is inadequate. “It’s an industrial revolution.”
The series explores why Jenkinson thinks Bakken oil could be “one of the greatest gifts that ever came to the people of North Dakota”—but only if managed properly in a way that protects the environment and respects the sentiments of residents. Done correctly, he posits, North Dakota can become “a model of enlightened twenty-first century development.”
It’s an engrossing and worthwhile series that ably treats the entire range of environmental, economic, and cultural issues surrounding domestic energy production in 21st century America.
Readers should check it out, starting here.