FORBES – STEVE FORBES – ONE OF THE AMAZING aspects of new technology is how it can be applied with awesome results to traditional “legacy” industries. Sam Walton, a small northwestern Arkansas retailer in the early 1960s, brilliantly employed mainframe computers and software to better manage Walmart’s inventories and supply chains in a way his vastly larger competitors didn’t. This was a critical factor in making his chain the dominant behemoth in traditional retailing.
A similar story is unfolding in agriculture, where high tech is radically transforming what we think of as a bucolic, hardly changing endeavor into a truly cutting-edge one with vast increases in productivity. Even as populations grow, food harvests are increasing at a far faster pace.
An even more dazzling transformation is taking place in oil and natural gas, the geopolitical implications of which we are barely beginning to grasp. It wasn’t so many years ago that we were inundated with stories about “peak oil”–the idea that since there were no more humongous oilfields to be discovered, the world would consume oil faster than it could be replaced until the day came when we would run out of the stuff. U.S. oil production supposedly peaked in the early 1970s. Natural gas was so expensive and scarce that regulators told utility companies not to burn it to generate electricity, because it was too precious to use for this purpose.
Behold the situation today! Thanks to such astonishing technological breakthroughs as horizontal drilling and hydraulic fracturing (popularly known as fracking), gas and oil output, especially from shale, have exploded. The U.S. is once again exporting energy.
Far more astonishing, American oil production is higher than ever before. Add up the total production of oil, gas and other petroleum liquids, and we have surpassed both Russia and Saudi Arabia, a situation absolutely inconceivable a decade ago. The reserves in the Permian Basin, located primarily in Texas, exceed those in all of Saudi Arabia. If that isn’t eye-popping enough, consider this: In the next decade or so, the U.S. will be the globe’s lowest-cost producer of both oil and gas. That’s right: We will be able to pump out these hydrocarbons cheaper than Saudi Arabia.
The demand for oil and gas is only going to grow as burgeoning middle classes in China, India and elsewhere buy and drive tens of millions more vehicles, not to mention purchase refrigerators, washing machines and other household goods that will consume more electricity.
As noted energy expert Mark Mills has said: “It’s not just that technology has unlocked the long-known abundance of shale resources that were heretofore too expensive, but that the character of that technology is now in transformation. The future is all about a digital and artificial intelligence revolution. The effect of that will be to lower the bar for break-even costs from shale.”
Imagine, China’s next generation will find itself becoming very dependent on the U.S. for its oil, and Europe will have a major gas alternative to Vladimir Putin’s Russia.
Picture: Forbes- Edwin Remsburg/VW Pics via Getty Images, Man typing on a laptop in a strawberry patch with remote moisture-sensing units and irrigation equipment at an orchard in Montgomery County, Maryland.