An extraordinary thing is happening to U.S. oil and natural gas production. It is increasing at an accelerating rate.

And therein could lie hope for a surprisingly strong economy, buoyed by a resurgence of manufacturing, along with job creation and the generation of substantial tax revenue for governments at all levels. Already, new supplies of oil and natural gas from surging shale production and deepwater drilling are providing more than a $1-billion-per-day benefit to the U.S. economy, according to a Merrill Lynch study. And the benefits in terms of jobs and revenue and economic activity will grow if and when the Obama Administration approves completion of the Keystone pipeline.

 

It has been a long time – 15 years to be exact – since U.S. oil production reached 6.4 million barrels a day. That was the average daily output in 2012, and the Energy Information Administration (EIA) expects it will be even bigger this year.

Altogether, oil production has increased by 760,000 barrels a day, according to EIA. That’s the largest rise in annual oil output since the middle of the nineteenth century. And gas production has also increased dramatically.

This has led to a sea-change in global geopolitics, with the United States expected to become a net energy exporter in the next few years, while Africa and the Middle East diminish in importance and OPEC no longer will be able to dictate world oil prices. Nor will Russia’s Putin be able to bully European countries, since they now have access to alternative sources of natural gas.