World Economy

Fracking Reshapes US Economy

Fracking Reshapes US EconomyFracking Reshapes US Economy

The explosion in US production of fossil fuels is reshaping the economies of some states — and also changing the calculus of politicians, MarketWatch reported Wednesday.

The most well-known success story, of course, is North Dakota. The nation’s third least populated state has exploited new technologies such as fracking to extract huge reserves of previously inaccessible oil. As a result, the state has pole vaulted to the No. 2 position in US oil production behind Texas.

North Dakota extracted a whopping 313.9 million barrels of oil  in 2013, compared to just 29 million barrels a decade earlier, according to the Energy Information Administration.

The effect on the state’s economy has been dramatic. Although the US unemployment rate soared to a 26-year high of 10% shortly after the end of the 2007-2009 recession, the highest it rose in North Dakota was 4.2%. And recently the state’s unemployment rate touched an all-time low of 2.5%, or less than half the national average.

The surge in domestic oil production has been especially pronounced in the past few years, mitigating potentially damaging price increases that might have occurred because of political turmoil in the Mideast and elsewhere.

”The US increase in 2013 was one of the biggest oil production increases the world has ever seen,” BP Group Chief Executive Bob Dudley wrote in the company’s highly respected annual survey of world energy production.

With no letup in sight, rapidly expanding energy production is also likely to give the US a long-term advantage over global economic rivals such as China that produce less energy and face higher costs.

Meanwhile, Pennsylvania is another state reaping a bonanza from the fracking revolution. The state’s output of natural gas skyrocketed to 3.26 trillion cubic feet in 2013 from about 198 billion cubic feet in 2008 – an eleven-fold increase. It’s now the third largest producer of natural gas behind Texas and Louisiana.

The benefits to Pennsylvania are less dramatic because the Keystone state has a much bigger population than North Dakota, but the gains aren’t insignificant. Pennsylvania’s unemployment rate stood at 5.8% in August, significantly lower than neighboring northeastern states such as New Jersey and New York.