The cost of petroleum imports accounted for 3 percent of America's annual GDP during the oil market's peak, but now it's just 1.7 percent. A Citigroup research reveals that cheaper gas prices and reduced dependence on energy imports could lower the country's current account deficit by 2.4 percent of GDP by 2020
Aubrey McClendon, the controversial outgoing CEO of the country’s third largest natural gas producer Chesapeake Energy Corporation, is known to have pioneered the Shale oil boom. Though he messed up several things at Chesapeake Energy Corporation (NYSE:CHK) he played a key role in reviving the U.S. economy, says Liam Denning of the Wall Street Journal. And the Federal Reserve chairman Ben Bernanke should thank him for this.
The Shale boom has reversed the the declining oil and natural gas production in America. The Department of Energy estimates that imported oil will account for just 32 percent of the U.S. oil consumption next year, far lower than 60 percent in 2005. Though a few years ago oil companies spent billions to build natural-gas import terminals, now many companies are planning to build export terminals.
McClendon’s far-sighted initiative has helped narrow the U.S. trade deficit. The cost of petroleum imports accounted for 3 percent of America’s annual GDP during the oil market’s peak, but now it’s just 1.7 percent. A Citigroup research reveals that cheaper gas prices and reduced dependence on energy imports could lower the country’s current account deficit by 2.4 percent of GDP by 2020. The current account deficit in 2012 was 3.6 percent which should go down, estimates Citigroup Inc. (NYSE:C), to 1.2 percent.
Another benefit to the economy is that a greater U.S. oil supply will help cap the global oil prices. Even if the OPEC countries reduce their production to keep the prices at the same level, the U.S. could boost its production capacity.
Bank of America Merrill Lynch said in a report that Americans paid just $76 billion for natural gas last year, compared to $216 billion in 2008. This saving from natural gas itself is greater than the payroll tax cuts of 2011, says BofA Merrill Lynch. The Cheaper petroleum resulting from the Shale boom has done the Fed a favor by helping put a check on inflation – the most dreadful consequence of quantitative easing.
The domestic oil production boom has created thousands of jobs. That, coupled with cheaper fuel that saves consumers extra money every day, has helped the economy recover.
Aubrey McClendon, despite all his faults, does deserve applause.