In This Review

Fueling Up: The Economic Implications of America's Oil and Gas Boom
Fueling Up: The Economic Implications of America's Oil and Gas Boom
By Trevor Houser, Shashank Mohan
Institute for International Economics,U.S., 2014, 172 pp.

Reversing decades of declines in U.S. production of gas and oil, the discovery of how to extract shale gas and so-called tight oil has raised U.S. output by more than 25 percent since 2007, resulting in claims of a renaissance in American manufacturing and creating the prospect of “energy independence” within two decades. Some of the hype has relied on exaggeration; Houser and Mohan, in contrast, provide a sober, largely quantitative assessment of this startling development. Their plausible best guesses suggest the new production will add 0.2 percentage points a year to growth in U.S. GDP until 2020, a small but significant stimulus, and will raise the level of potential U.S. GDP by 1.4 percent for several decades after that. The environment will also benefit, insofar as gas will increasingly substitute for coal in power generation. The new production will also boost U.S. trade in a number of ways. All in all, this is a positive development for the United States, made possible by several government-assisted innovations in gas and oil extraction and the dogged persistence of a few U.S. firms.