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The shale gas boom has provided the U.S. with an opportunity for cheap, clean, abundant energy. An October 2013 study authored by economist Michael J. Orlando on behalf of the Bush Institute finds that shale gas production rose to over 20% of total domestic gas production in the U.S. by 2010 from less than 1% in 2000. Furthermore, the U.S. drilled more than 10,000 shale gas wells in 2011, increasing expenditures by nearly 90% from 2010.
Due in large part to the shale boom, the U.S. is projected to have some of the lowest natural gas prices of any industrialized nation over the next 20 years. By contrast, in Europe and Asia the price of natural gas is three or four times more expensive than that it is in the U.S. Reduced costs for energy and raw materials derived from natural gas, such as ethane used to produce plastics, have allowed the U.S. to gain a competitive advantage in manufacturing.
Orlando concludes, “Shale gas holds the potential to increase U.S. energy security, as consumer demand shifts to this relatively abundant domestic supply.” In addition, shifting to natural gas utilization in areas such as transportation may help to reduce emissions associated with carbon-based energy consumption. According to the U.S. Environmental Protection Agency, “Compared to the average air emissions from coal-fired generation, natural gas produces half as much carbon dioxide, less than a third as much nitrogen oxides, and one percent as much sulfur oxides at the power plant.”
The U.S. contains a sufficient supply of shale gas to enjoy these benefits for years to come. However, in many states with shale gas resources, a number of legislative initiatives can inhibit gas development. Orlando’s research finds that, as of mid-year 2013, 38 states are debating new regulation of shale gas development activity. In total, 211 bills are currently under consideration at the state level. If passed, “each of these laws will require a state-level agency to promulgate one or more regulations to ensure implementation of new legislation.”
New York is one state where regulation particularly inhibits economic growth. In his study, Orlando calculates that if New York were to lift its current moratorium on shale gas development, the state could enjoy an increase in gross state product equal to $4.5 billion over three years and generate some 39,000 jobs. Over a decade, drilling and gas development in New York could generate $8 billion in economic activity and support 69,000 new jobs. These are serious estimates for a state that has an unemployment rate near 8%.
At a 2013 energy conference hosted by the Bush Institute in Dallas, experts and industry leaders called for regulation that is designed to foster, not hinder, investment in energy. For the economy to experience faster growth, it is crucial that America develops its abundant natural resources.
Michael Orlando’s study can be found here.
Nicholas Saliba is a consultant for the George W. Bush Institute and a Fellow with the Maguire Energy Institute in the Cox School of Business at Southern Methodist University in Dallas, Texas. He graduated Magna Cum Laude with Honors from Southern Methodist University in May 2014, receiving a B.B.A. in Finance, B.S. in Economics with Financial Applications, and B.A. in Public Policy. He also received minors in History and Political Science, along with a concentration in Energy Management.
Mr. Saliba has been a writer and researcher for the 4% Growth Project, the North America Scorecard Project, and the North America Working Groups of the George W. Bush Institute. He has co-authored numerous studies, and spoken on issues pertaining to finance, economics, and public policy in the energy sector. In 2013, Mr. Saliba was the co-author of the book "The Energy Logjam: Removing Regulatory Obstacles to Fuel the Economy," published by the George W. Bush Institute. Additionally, he has consulted on issues pertaining to energy, economics, and public policy for organizations including Consumer Energy Alliance, Texas Education Service Centers, D Magazine, Bracewell & Giuliani LLP, the Ohio Oil & Gas Association, and Energy Future Holdings.
Mr. Saliba is a member of Delta Sigma Pi Professional Business Fraternity, Omicron Delta Epsilon International Honor Society in Economics, and Phi Beta Kappa.
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