Ambrose Evans-Pritchard of The Telegraph has published a beautiful essay that succinctly describes the re-industrialization of America that is just beginning. In Europe left behind as shale shock drives America’s industrial resurgence, he argues that the impact of shale oil and shale gas will make the US independent before 2020. The geopolitical implications are enormous. As he puts it,
The implications are momentous. America will no longer need a single drop of oil from the Islamic world. The strategic burden will fall on Europe, which is meekly disarming itself to meet Wolfgang Schauble’s austerity targets. Russia and China will be pleased to help.
Japan and much of Europe are shutting down much of their nuclear power industry. Renewable energy has proven to be an enormous unreliable expense. As Evans-Pritchard notes, Prices on the Pacific rim [of liquified natural gas] are near $15 per million British thermal units (BTU), compared to $3 in the US. The differential in energy costs is making European and Asian manufacturing uncompetitive with a newborn American petrochemical industry which is shuttering plants across Europe while building new world-class facilities in the US. He notes:
This is happening just as other clusters of manufacturing – machinery, electrical products, transport equipment, furniture, etc – are “re-shoring” back from from China to the US. A 16pc annual rise in Chinese wages over the last decade has changed the game. PricewaterhouseCoopers calls it the “Homecoming”.
In short,the US is witnessing an industrial rebirth that will once again make it the economic powerhouse it was once. And this will happen quickly being aided by disastrous policy decisions in much of the rest of the developed world.