One billion dollars every single day.
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.
Wake up america, as a professional commodities trader i speak of what i know when i tell you the idea that this new glut of natural gas will NOT be the boon of the American public it is touted as being, but instead will as ALWAYS primarily benefit the oil and gas companies. Think im wrong? Then ask yourselves if this glut of natural gas that certainly exists is going to benefit the PEOPLE why has the price of natural gas in the open market (commodities markets) fallen from highs of $14 between 2006-2008 down to Lows of under $2 -a whopping drop to 1/7th the cost and your natural gas bills for your house have either not dropped at all or as in my case here in texas actually RISEN in the last few years? check you bills folks, NOT the overall price of the bill, but the RATE your paying for the gas. to say they are making windfall profits here is the understatement of all time. this is the equivilent of my telling you that oil had fallen from $130 a barrel down to $18 (a price at which gasoline was about 75cents a gallon in the… read more »
…past) -WITH NO MOVEMENT in the price of gas at the pumps. Instead of celebrating all this natural gas production and its touted benefits to us as citizens, -and screaming for the govenment to get behind more drilling we NEED to be screaming to our congressman “where is this benefit to US for all the risk we are taking with these unknown drilling technigues? im all for drilling, but not for US as a people to take all the risks to our water and envirioment while THE oil companies and city power providers reap all the benefits. WAKE UP ,check my facts and start asking questions folks!
President Obama’s convention acceptance speech tonight included a comment that the oil and gas industry’s $4B of corporate welfare needed to be ended. I assume he means taxes should be raised on oil companies, but who knows without more explanation. His comment seems misinformed, if not downright dishonest and certainly devisive.. More than this, his ignoranceof the way the industry works and its benefits to our nation is scary.
Google “60 years of Energy Incentives” and download the PDF report which was prepared for the nuclear industry. The federal government gave nearly $500 billion worth of incentives to the oil and gas industries from 1950 to 2010, but only $74 billion to renewables like solar and wind… that includes the half billion lost when Solyndra was put out of business by china selling panels here for less than they paid us for the raw materials (yes, they bought about 80% of the raw materials for the panels from the USA), let alone shipping costs.
So, I’d say his comments are likely better informed than those from someone that hangs out on exxon’s site subtly shilling for more petro subsidies.
What we SHOULD be doing, rather than paying farmers $2 billion/year to *not* grow anything on 30 million acres (about 10%) of USA cropland, is telling them to grow Canola on that acreage, and instead use that money to build mini refineries on every farm to press out the oil (the leftover pressed meal being a nutritious livestock feed supplement), mix in ~15 gallons of methanol and 3.5 lbs of lye, for about 100 gallons net of biodiesel per acre…
That has… read more »
…the potential to eliminate about 200,000 barrels (not gallons) of imported oil per day, which the farmers could burn in their tractors so if anything happens to the supply (you might be too young to remember the embargo), they could still grow our food.
And its distribution would already be 95% complete by spreading out the mini refineries (80% Solar Hot Water to provide heat as a catalyst; 20% PhotoVoltaic to run the press and pumps) onto every farm, also eliminating artificial shortages imposed by companies manipulating the supply.
This response demonstrates how poorly understood the situation really is. First of all, including the fuels and petrochemicals made from petroleum, it’s about a $1 trillion per year industry. If the government gave a total subsidy of $500 billion over a period of 60 years, that is a very small %, comparable to what many industries received, less than some, and FAR less than what’s been pumped into renewables lately (in % terms – solar, wind, and biofuels are tiny compared to crude oil).
Similarly, 200,000 barrels per day of biodiesel is literally a drop in the bucket vs. the 20,000,000 barrels of crude oil the USA uses, and the 30,000,000 acres in the CRP are there for reasons that go beyond subsidy, including environmental & societal benefits, plus the fact that a lot of it just isn’t very good farmland to begin with, or that there isn’t enough water to grow much of anything on it.
Beyond that, biodiesel (BD) is a terrible fuel, and farmers in the Midwest could not use it above a low % blend because of cold-weather problems. And it makes no sense at all to press oil seeds and make BD on the farm scale. Even… read more »
…BD needs to be made at a scale greater than that to be even close to cost-effective. And the reason the farmers aren’t already using BD, photovoltaics, and solar heating is because these are not cost-competitive unless they get subsidies much higher than what is provided for petroleum.
Don’t get me wrong, because I am pro-renewable, but the total failure of renewables (including wind!) in the absence of major subsidies is because they cannot compete on a cost basis. For petroleum, the problem is not the $ subsidies, which are trivial, but the “hidden costs,” including climate change, environmental damage, and diplomatic and military impacts, including the underlying causes of two wars in Iraq, one in Afghanistan, and the inevitable upcoming interventions in Iran and elsewhere. If we made U.S. consumers pay THOSE costs at the pump, instead of hiding them in the general tax burden and the slow degradation of our environment, THEN renewable fuels could compete without subsidies.
And I don’t object to R&D and “start-up” subsidies for renewables, either, but the money is just wasted if the end result has no chance to compete in the marketplace.
“I assume he means taxes should be raised on oil companies, but who knows without more explanation.
- Kyleen Franz
Are you completely unaware of the huge SUBSIDIES the oil industry recieves from the U.S. government? Raise taxes, my foot! Take away the corporate welfare. You uninformed who yell about the peanuts social welfare provides the poor need to recognize the HUGE amounts of corporate welfare you never complain about. THAT’S your money and mine, too!
Wake up america, as a professional commodities trader i speak of what i know when i tell you the idea that this new glut of natural gas will NOT be the boon of the American public it is touted as being, but instead will as ALWAYS primarily benefit the oil and gas companies. Think im wrong? Then ask yourselves if this glut of natural gas that certainly exists is going to benefit the PEOPLE why has the price of natural gas in the open market (commodities markets) fallen from highs of $14 between 2006-2008 down to Lows of under $2 -a whopping drop to 1/7th the cost and your natural gas bills for your house have either not dropped at all or as in my case here in texas actually RISEN in the last few years? check you bills folks, NOT the overall price of the bill, but the RATE your paying for the gas. to say they are making windfall profits here is the understatement of all time. this is the equivilent of my telling you that oil had fallen from $130 a barrel down to $18 (a price at which gasoline was about 75cents a gallon in the… read more »
…past) -WITH NO MOVEMENT in the price of gas at the pumps. Instead of celebrating all this natural gas production and its touted benefits to us as citizens, -and screaming for the govenment to get behind more drilling we NEED to be screaming to our congressman “where is this benefit to US for all the risk we are taking with these unknown drilling technigues? im all for drilling, but not for US as a people to take all the risks to our water and envirioment while THE oil companies and city power providers reap all the benefits. WAKE UP ,check my facts and start asking questions folks!
President Obama’s convention acceptance speech tonight included a comment that the oil and gas industry’s $4B of corporate welfare needed to be ended. I assume he means taxes should be raised on oil companies, but who knows without more explanation. His comment seems misinformed, if not downright dishonest and certainly devisive.. More than this, his ignoranceof the way the industry works and its benefits to our nation is scary.
Google “60 years of Energy Incentives” and download the PDF report which was prepared for the nuclear industry. The federal government gave nearly $500 billion worth of incentives to the oil and gas industries from 1950 to 2010, but only $74 billion to renewables like solar and wind… that includes the half billion lost when Solyndra was put out of business by china selling panels here for less than they paid us for the raw materials (yes, they bought about 80% of the raw materials for the panels from the USA), let alone shipping costs.
So, I’d say his comments are likely better informed than those from someone that hangs out on exxon’s site subtly shilling for more petro subsidies.
What we SHOULD be doing, rather than paying farmers $2 billion/year to *not* grow anything on 30 million acres (about 10%) of USA cropland, is telling them to grow Canola on that acreage, and instead use that money to build mini refineries on every farm to press out the oil (the leftover pressed meal being a nutritious livestock feed supplement), mix in ~15 gallons of methanol and 3.5 lbs of lye, for about 100 gallons net of biodiesel per acre…
That has… read more »
…the potential to eliminate about 200,000 barrels (not gallons) of imported oil per day, which the farmers could burn in their tractors so if anything happens to the supply (you might be too young to remember the embargo), they could still grow our food.
And its distribution would already be 95% complete by spreading out the mini refineries (80% Solar Hot Water to provide heat as a catalyst; 20% PhotoVoltaic to run the press and pumps) onto every farm, also eliminating artificial shortages imposed by companies manipulating the supply.
This response demonstrates how poorly understood the situation really is. First of all, including the fuels and petrochemicals made from petroleum, it’s about a $1 trillion per year industry. If the government gave a total subsidy of $500 billion over a period of 60 years, that is a very small %, comparable to what many industries received, less than some, and FAR less than what’s been pumped into renewables lately (in % terms – solar, wind, and biofuels are tiny compared to crude oil).
Similarly, 200,000 barrels per day of biodiesel is literally a drop in the bucket vs. the 20,000,000 barrels of crude oil the USA uses, and the 30,000,000 acres in the CRP are there for reasons that go beyond subsidy, including environmental & societal benefits, plus the fact that a lot of it just isn’t very good farmland to begin with, or that there isn’t enough water to grow much of anything on it.
Beyond that, biodiesel (BD) is a terrible fuel, and farmers in the Midwest could not use it above a low % blend because of cold-weather problems. And it makes no sense at all to press oil seeds and make BD on the farm scale. Even… read more »
…BD needs to be made at a scale greater than that to be even close to cost-effective. And the reason the farmers aren’t already using BD, photovoltaics, and solar heating is because these are not cost-competitive unless they get subsidies much higher than what is provided for petroleum.
Don’t get me wrong, because I am pro-renewable, but the total failure of renewables (including wind!) in the absence of major subsidies is because they cannot compete on a cost basis. For petroleum, the problem is not the $ subsidies, which are trivial, but the “hidden costs,” including climate change, environmental damage, and diplomatic and military impacts, including the underlying causes of two wars in Iraq, one in Afghanistan, and the inevitable upcoming interventions in Iran and elsewhere. If we made U.S. consumers pay THOSE costs at the pump, instead of hiding them in the general tax burden and the slow degradation of our environment, THEN renewable fuels could compete without subsidies.
And I don’t object to R&D and “start-up” subsidies for renewables, either, but the money is just wasted if the end result has no chance to compete in the marketplace.
“I assume he means taxes should be raised on oil companies, but who knows without more explanation.
- Kyleen Franz
Are you completely unaware of the huge SUBSIDIES the oil industry recieves from the U.S. government? Raise taxes, my foot! Take away the corporate welfare. You uninformed who yell about the peanuts social welfare provides the poor need to recognize the HUGE amounts of corporate welfare you never complain about. THAT’S your money and mine, too!