For the past several weeks, falling oil prices and a likely veto of the Keystone XL pipeline by President Barack ObamaBarack Hussein ObamaUS blocking private charter flights to Cuba Biden, Harris to address Democratic convention from Chase Center in Delaware Kamala Harris is now under the protection of Secret Service: report MORE have been commanding the headlines.  But something more significant has been lost in the commotion.  Last year, the United States produced more oil and natural gas than any other country, allowing us to achieve virtual energy independence which has been an expressed goal of public policy since the 1970s.  What’s more, American consumers are reaping a fiscal windfall as lower energy prices reduce the costs driving their cars and heating and powering their homes.  Most American industries are benefiting as well, especially energy-intensive manufacturing companies that use oil and gas both as fuels and feed stocks.

American innovations, in particular the application of hydraulic fracturing and horizontal drilling in the nation’s many shale plays, are primarily responsible for our new-found energy abundance.  Ironically, while total U.S. oil output has doubled since 2008, off-shore production has been dropping for the past six years.

ADVERTISEMENT

Here’s another little known fact:  The largest gas field in the nation today isn’t in the Southwest but in the North East.  The Marcellus shale, which encompasses much of Pennsylvania, West Virginia, Eastern Ohio and the southern tier of New York, has become the nation’s biggest gas producer.  And even though New York has banned hydraulic fracturing, the state’s residents nonetheless benefit from the drilling activity occurring on the south bank of the Susquehanna River.

The economic benefits from America’s shale revolution have not been limited to the traditional oil patch but have been spread widely across the nation.  Thirty-two states currently produce commercial amounts of oil and gas, and though only about 350,000 workers actually toil in the field, the energy industry directly and indirectly supports more than nine million jobs across the country.

Cheap oil and natural gas are helping the economy in other ways, such as reducing our trade deficit and attracting foreign investment, especially in heavy manufacturing.  Increased use of clean natural gas for power generation is largely responsible for reducing greenhouse gas emissions to their level of 20 years ago. 

The shale boom has also helped revive a number of “Rust Belt” cities who are providing drilling equipment and oilfield services to operators in the northeastern U.S.   And the Great Recession would have been longer and deeper absent the shale boom that started about the time the economy went into a tailspin.

Without question, the dramatic drop in oil and gas prices over since last summer is posing challenges to America’s domestic energy industry.  The number of operating rigs, as well as new drilling permits, has been falling for the past two months, and several large companies have recently announced layoffs.    At today’s prices, new deepwater drilling in the Gulf of Mexico may well be put on hold. 

But oil prices won’t remain depressed forever. At present, every OPEC country, including Saudi Arabia, is running a budget deficit due to lower prices, an imbalance that can’t persist for the long-term.  By contrast, the U.S. budget picture will be minimally affected by lower oil and gas prices while the International Monetary Fund projects a one-half percent bump in our GDP growth rate this year from cheaper energy.

Being the world’s largest producer of oil and gas gives America huge economic and political leverage, but only if we engage more fully in the global marketplace.  To retain this leverage, while sustaining our oil and gas industry during a period of lower prices, we should quickly remove any artificial barriers to enhanced production.  In addition to completing the Keystone XL pipeline, all restrictions on the export of oil and natural gas should be lifted and lease sales on federal lands and the outer continental shelf should be resumed.

Weinstein is associate director of the Maguire Energy Institute and an adjunct professor of business economics in the Cox School of Business at Southern Methodist University in Dallas.