Will falling world energy prices derail the U.S. oil and natural gas boom, as so many are worried? No, says one scholar.
Writing in The Wall Street Journal, Hudson Institute fellow Mark P. Mills says one reason is that “shale production remains profitable at today’s lower prices.” And that’s largely because “more than $500 billion of private investment into hydrocarbon infrastructure” in the past five years has resolved former oversupply caused by “too much domestic oil chasing too little capacity to move, store and use it.”
Profits are “possible at prices even lower than today” because drilling technology is “far more productive than when the boom started.” And unlike many energy-producing nations, the United States has “dozens of world-class fields, thousands of production companies, tens of thousands of related businesses and millions of miles of pipe and rail,” giving it “profound economic leverage.”
Further technological advances will boost the U.S. shale-energy industry’s productivity and safety even more, leading Mr. Mills to predict additional big gains in output within just a few years — what he calls “America’s shale boom 2.0.”
Energy markets always will fluctuate, as Mills notes. But America’s shale energy industry is poised to thrive in the long run — if U.S. regulators will let it.