America’s ongoing energy revolution is one of the real bright spots in an otherwise sub-par economic expansion, and provides one of the best reasons to be bullish about America’s future.

By Mark J. Perry at Carpe Diem

“On the eastern bank of the Mississippi River, about an hour upstream from New Orleans, the outline of Nucor Corporation’s new $750 million iron-processing plant is rising between fields of sugar cane and sweet gum trees.

It’s a harbinger of a nationwide investment boom spreading from the oil fields of North Dakota and the Marcellus gas shale in Pennsylvania to power plants in California and chemical refiners in Texas. A surge in U.S. natural gas development has spurred $226 billion in spending plans on pipelines, storage, processing facilities and power plants, most slated for the next five years, according to Industrial Info Resources, a market- intelligence provider in Sugar Land, Texas.

U.S. energy supplies have been transformed in less than a decade, driven by advances in technology, and the economic implications are only beginning to be understood. U.S. natural gas production will expand to a record this year and oil output swelled in July to its highest point since 1999 (see top chart above). Citigroup estimated in a March report that a “reindustrialization” of America could add as many as 3.6 million jobs by 2020 and increase the gross domestic product by as much as 3 percent.

There are signs the economic gains have begun to expand beyond the oil and gas fields and that the promise of abundant, low-cost fuels will give a competitive edge to industries from steel, aluminum and automobiles to fertilizers and chemicals. That would provide a boost to a U.S. manufacturing sector that has lost 5.12 million jobs since 2001 and become the focus of a national debate over how to revive factory employment. Manufacturers have added 532,000 jobs since January 2010 as the economy started to recover, Bureau of Labor Statistics data show.

The expansion of fossil-fuel production — coupled with a weak economy and increased energy efficiency — has helped the U.S. pare its crude oil imports by 17 percent since the 2005 peak, Energy Department data show. Imports in 2011 accounted for 45 percent of U.S. consumption of crude and refined products. The department predicts the share will fall to 39 percent next year, which would be the first time since 1991 that imports dropped below 40 percent of demand (see bottom chart above).”

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