Continued from Part Two.
For the US to become self-sufficient in energy would have significant benefits on a number of levels. The balance of payment would be significantly improved as the US gradually spent less money buying oil from Canada, Nigeria, Venezuela, Mexico and Saudi Arabia – its current top five suppliers.
It may not necessarily lead to a collapse in global oil prices, as demand is likely to continue to rise in emerging markets, gradually replacing US consumption from the world market, but dramatically lower natural gas prices are already helping US industries (e.g. chemicals, fertilizers, metals and ceramics) to the extent that many firms who have moved production offshore five to 10 years ago must be reviewing whether they should bring such production capacity home.
Indeed, Citigroup estimates that the transformation in the energy supply market could result in 3.6 million new jobs, a reduction in the trade deficit of 60 percent and an appreciation of the dollar by 5.4 percent as imports shrink.
Not everyone is welcoming the potential changes, though. For as much as replacing electricity production from coal by natural gas is an improvement in emissions, environmentalists fear low natural gas prices will weaken the case for renewable power development, and even the nuclear lobby cannot compete with natural gas at $2/tcf without subsidy.
Improving fuel consumption from conventional engines and hybrids, coupled with falling petrol prices, would severely hinder the already fragile market for electric cars, raising questions about all those billions being poured into lithium ion battery plants around the country.
But an energy-secure and energy-independent United States may also be a less internationalist and engaged country, not as concerned about maintaining influence in the Middle East or Asia as it has traditionally been. Much will depend on political support and environmental objection to the development of shale oil resources in the years ahead.
The pace remains uncertain, but one truism is likely to prevail: if resources lie under the ground and it is economic to exploit them, then sooner or later, they will be exploited.