The New Oil and Gas Boom

The U.S. will soon be a net exporter of energy. That could change everything

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Illustration by Oliver Munday for TIME

In their second debate, Barack Obama and Mitt Romney began with a spirited discussion on energy, during which they both agreed on the goal of making America more energy independent. This has been part of presidential rhetoric since Richard Nixon declared energy independence his Administration's aim. As it happens, regardless of who is elected President, a tidal shift is taking place in energy that will matter far more to America's energy future than anything either candidate plans or imagines.

Over the past decade, America has experienced a technological revolution--not, as expected, in renewable energy but rather in the extraction of oil and gas. As a result, domestic supplies of new sources of energy--shale gas, oil from shale, tight sands and the deepwater, natural-gas liquids--are booming. The impact is larger than anyone expected.

In 2011, for the first time since 1949, the U.S. became a net exporter of refined petroleum products. Several studies this year have projected that by the end of this decade, the U.S. will surpass both Russia and Saudi Arabia and become the world's largest producer of oil and liquid natural gas.

Much of this opportunity comes from America's newfound ability to draw oil and gas from geological formations that just a few years ago geologists deemed impenetrable. The consequences of this breakthrough, both economic and geopolitical, are difficult to assess, but they range from a manufacturing renaissance in the U.S. to a decline of the geopolitical clout of Russia and the Middle East. Both would obviously be welcome news.

Romney has accused the Obama Administration of throwing obstacles in the way of this boom. But so far they do not seem to have had much effect in slowing things down.

Of course, there are many on the left who believe that the Obama Administration has gone soft on the oil and gas boom and wish he had instituted more regulations. Fracking--the procedure by which shale oil and gas are extracted from deep rock formations stretching from the Appalachians nearly to the Rockies--remains controversial and arouses great passion. The Oscar-nominated documentary GasLand suggests that unlocked gas could burst out of people's taps, allegedly because of fracking. These charges are important, but they need more thorough investigation. Gas could end up in water pipes for a variety of reasons unrelated to fracking.

The Environmental Protection Agency is doing a comprehensive study of fracking, in part because we need to better understand the ramifications of this promising new extraction method. At this point it seems the greatest harm has come from small fracking operations that don't worry that an environmental problem could damage their brand name or profit margin. This makes it an industry tailor-made for intelligent regulation, because the big companies could well support clear rules that everyone, in a growing number of states, would follow.

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