Robert Luddy is a member of the North Carolina Leadership Team for Job Creators Alliance and president and founder of CaptiveAire Systems, Inc.
In the midst of a struggling economic recovery, one of the nation’s smallest states is leading America’s expansion–so much so that jobs outnumber the workers.
According to the U.S. Bureau of Economic Analysis, known as the BEA, North Dakota is expanding more rapidly than any state in the union, based on changes between 2010 and 2011 in gross state product, or GSP, the annual output of services and goods at the state level. The “Peace Garden State” saw its GSP skyrocket 7.6 percent in 2011. Oregon was the next closest state, with a mere a 4.7 percent gain. While other states are dealing with rampant, chronic unemployment, North Dakota can’t find enough warm bodies to fill all its needs.
What’s North Dakota’s secret? Two words: oil and gas.
North Dakota is in the middle of an unprecedented boom in oil and gas production. Indeed, the small state is rubbing elbows with traditional energy giants like Texas and Alaska, clocking in now as the nation’s fourth-largest oil-producing state.
While politicians pander to unsustainable alternative energy dreams that require billions in subsidies but have never delivered, innovations in extraction techniques, including horizontal drilling and hydraulic fracturing (“fracking”), have turned dormant economies into powerhouses.
However, even as new technologies are revolutionizing traditional energy extraction, our public policies have run the opposite direction. We have stymied the Keystone pipeline. We have thrown away billions of dollars in subsidies and loan guarantees on alternative energy schemes–like now-infamous Solyndra. We have shut off access to entire swathes of remote land and offshore sites–just to placate special interest groups.
America does need to explore alternative energy, but the drive and the support for such endeavors must come from market demand, not government fiat and subsidy. The revolution in natural gas extraction we are seeing now is not because a politician decreed it, but because market forces prompted innovation.
The evidence is right there in black and white. Domestic oil production has grown 12 percent over the last four years, while oil imports declined to 45 percent of total annual consumption, down 25 percent. In 2008, America was on track to spend $1 trillion a year on imported oil. This year, we are looking at spending just $350 billion.
Just four years ago, it was thought the United States had just over a decade of recoverable natural gas reserves left. But market-driven innovations like fracking have changed the equation. Now the best estimates say we have recoverable natural gas reserves that will last well into the next century. It’s so abundant that storage is the biggest challenge. We are becoming exporters rather than importers of natural gas.
When true market pressures arise pushing for alternative energy, the innovations will come. It can’t be faked or jump-started with an infusion of federal money, where bureaucrats driven by political considerations pick which technologies to back and which to ignore.
Price and demand drive innovation, not command economics. We need a reasonable, market-driven energy policy that lets innovation happen, and allows for the creation of badly needed jobs–whether in traditional or alternative energy production.