Comeback: America's New Economic Boom
Charles R. Morris
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The great economic boom times in American history have come because of fortuitous discoveries. Natural resources (coal first, then oil) fueled vast economic and industrial expansions, which in turn helped create and supply new markets. The last genuine economic game changer was the technology boom of the 1990s, which gave the U.S. a global competitive advantage for a while based on electronics and silicon. One of the first writers and analysts in the U.S. to predict that the tech boom would lead to a period of sustained economic growth was Charles Morris. In defiance of the recessionary times (in 1990), he saw the coming boom. Now, in 2013, he sees the threshold of another.
This time the gift is natural gas. The amount and distribution of gas in American shale is so vast that it has the potential to transform the manufacturing economy, creating jobs across the country, and requiring a new infrastructure that will benefit the nation as a whole. Because of fracking, jobs that once would have been outsourced abroad will return home, America can become a net exporter of energy, and cheap energy will provide the opportunity for innovation and competition.
In light of this new opportunity, and other complementary developments Morris explores in this book, the U.S. ought to be approaching the future with a robust self-confidence it has not experienced in a while. But we could fumble it away. The gold-rush style of shale boom companies does not make them good neighbors. A counter-reaction could put their industry, and the new era of national prosperity, at risk. We also have a political system that has the capacity to spoil the benefits of this huge boon. If the wealth locked in the continental shelf is not shared for the general economic good, but is instead exploited in short-term profiteering, then many of the opportunities that exist will be choked off by a few very rich corporations.
Managing the great bonus of the vast store of cheap energy is going to become a defining political challenge in the years ahead. At the threshold of a thrilling opportunity, Morris is a brilliantly perceptive guide.
published in late 2012 found only two shale gas plays—the Barnett and the Fayetteville—with meaningful data, along with one tight oil field—the Elm Coulee in the Bakken play.12 All three had started with high production rates but experienced rapid declines. Companies love the high initial production since they recover costs faster, but long-term recovery estimates and capitalization values assume production schedules of twenty-five to thirty years. If the few early decline rates turn out to be
most market-efficient. So if energy product could move seamlessly to the best market, quantities of gas and of petroleum with the same energy values would be priced approximately the same—the price of gas and the price of oil would become linked. The increase in efficiency would allow all the world’s consumers to pay slightly less for energy. American gas companies, and especially the largest players like Exxon-Mobil and Shell that are best positioned to trade globally, would get a nice profit
demagogues and reckless experimenters, from people who want the world changed because they cannot get along in it as it is, from poseurs and dilettanti, and from malcontents who love disturbance for its own sake.1 Political cycles turn when an extended period of either conservative or liberal hegemony brings the baser, more self-interested, or barmiest elements to the fore. The market and regulatory reforms introduced by economic and monetary conservatives in the 1980s, I believe, made a major
“Federal-aid-highways” comprise the broader class of roads that are eligible for federal assistance. The quality of the roads has been improving steadily for some time: from 2000 through 2009, for example, vehicle miles traveled on NHS roads rated as “good” rose from 48 percent to 57 percent, nearly a 20 percent increase. NHS bridges have been improving too. “Structurally deficient” bridges—not necessarily dangerous, but requiring significant rehabilitation to stay in service—have dropped from 6
capabilities. Unconventional Hydrocarbons Coal, oil, and natural gas all derive from decayed plant and animal matter that has slow-cooked within the earth for hundreds of millions of years. As dead organic material accumulated on the muddy bottoms of swamps, lakes, and oceans, the mud sank and was gradually compressed into sedimentary shale rock, trapping the organic matter within its many layers and fault lines. Compression generates heat, which gradually transformed the organic matter