The United States is the world's largest exporter of natural gas — a remarkable change from decades ago, when America was dependent on the often-hostile OPEC nations for its energy needs. That's probably saved us as much as $4 trillion in the past two decades.
That change is largely thanks to the "Shale Revolution," the development of fracking and horizontal drilling technology that is now responsible for 36 percent of total U.S. production.
In a new
@nberpubs paper, Berkeley's Lucas W. Davis uses data on gas prices in the United States, Europe, and Japan to estimate the savings generated by the Shale Revolution.
The effect is obvious in the plot below: Starting in 2007, American prices diverge sharply from Europe and Japan. We're also more insulated from big shocks.
He pegs the total as between $3.1T and $4.3T between 2007 and 2025. That's $164B to $227B per year — between $500 and $700 per person per year.
nber.org/papers/w35245