Anecdotes are no substitute for hard data. But when they start to reach a critical mass and they all tell the same story, you know something big is going on.
A long-time car salesman relocates to south Texas to capitalise on the soaring demand for truckers to haul sand to hydraulic fracturing, or fracking, sites across the Eagle Ford shale formation. Nearby, the Corpus Christi school district cannot find bus drivers, who are getting paid a lot more to cart sand.
Workers pour into Williston, North Dakota, drawn by offers of six-figure salaries for jobs connected with the Bakken shale formation. Even though housing development is sky-rocketing, the Walmart parking lot looks like a caravan park, packed with campers providing temporary living quarters until housing construction catches up with demand.
There is no oil and gas drilling in Idaho, but Fleetwood Homes has been ramping up production and hiring workers to build prefab homes for shipment to the Bakken oil field in North Dakota, according to the Wall Street Journal.
Energy independence, the Holy Grail for every US president since Jimmy Carter, is within reach, oil industry executives and analysts tell National Public Radio. Within the next 10 years, the US will no longer have to import oil and will be able to export natural gas, energy economist Philip Verleger says. PFC Energy chief executive Robin West compares the impact of the “shale gale” to the fall of the Berlin Wall.
Some long-haul trucking companies are converting to natural gas because of the cost advantage over diesel, according to Bloomberg. Fleet owners that do not convert a portion of their vehicles to natural gas will find themselves at an economic disadvantage.
For anyone who has not read or heard about it yet, there’s an oil and gas boom under way in the US. By some estimates, the US has three times the proven shale oil reserves of Saudi Arabia.
Thanks to new drilling techniques for extracting oil and gas from shale rock underground, the price of natural gas has plummeted to 10-year lows, creating a market-based incentive – no government subsidies required – for truckers to convert to the cheaper, cleaner fuel. All of this has broader implications for the US economy.
Let’s start with Washington’s obsession: job creation. The oil and gas industries have added 33 300 workers since December 2009, the recent low point.
Manufacturers of drilling equipment need raw materials, such as steel and chemicals. So there is a natural multiplier effect. Think of it as fiscal stimulus without the government first taking from Peter to give to Paul.
Every direct job created in the oil and gas extraction industry, for example, yields 2.3 jobs elsewhere in the economy.
With the differential between oil and natural gas prices at a record high, more and more homeowners are converting from oil heat to natural gas even though the switch may take anywhere from one to five years to pay for itself.
If the price trends continue, the focus may shift from concern about higher petrol prices killing the economy (the glass is half empty) to the realisation that cheap natural gas can act as a tailwind (the glass is half full).
* Caroline Baum is a Bloomberg columnist. The opinions expressed are her own.