The crisis that just played itself out in the Persian Gulf seems to have stabilized for the moment. A number of factors contributed to the surprising de-escalation, but there is one that may have gone unnoticed, as it is a long-term trend slowly remaking the economy of the world.
While the flow of energy from the Middle East is still a vital source for the world economy, it is no longer the most crucial component fueling the economic engine we call home. A disruption in the Strait of Hormuz has less impact on our domestic affairs, because the all of the above approach of the last five administrations has finally resulted in that long sought holy grail: energy independence.
To put it simply, we're killing it. And not just in oil. As of the previous administration and continuing strongly into this one, this country is the largest producer of natural gas in the world.
And we're doing it cheaply.
Last week, The U.S. Energy Information Administration issued a report with the following headline:
Natural Gas Prices in 2019 Were the Lowest in the Past Three Years.
And that conclusion is based on prices from the Henry Hub in Louisiana, which is regarded by the Federal Government as the national benchmark.
Those prices? $2.57 per million British Thermal Units (mmBTU). That is .60 cents less than the previous year, and it is the lowest price since 2016. That number goes a long way to explaining not only our continued economic growth but also why there were no fears of energy shocks as the Iranian situation played itself out over the previous week.
That lower price contributes to two big economic engines. Cheaper gas means the electric generation sector is able to make larger purchases while simultaneously keep electric rates down. Lower electricity prices means customers' money is then in turn freed up for higher consumption.
And that is even in places like the Pacific Northwest where rough winters caused large amounts of natural gas consumption.
There was a time when this was an either/or proposition.
Lower energy prices would have hurt the sector that produces while giving a boon to the consumer. Domestic production could not keep up with flowing spigots from the petro-dictatorships of Saudi Arabia and Russia. On the other hand, higher gas prices would encourage domestic exploration but dampen consumer enthusiasm to participate in the overall economy.
That is no longer the case. That cheap fuel is American, and rather than importing the energy from abroad and too often propping up murderously failed states, we are now shipping surplus overseas and competing with those who seek to diminish our influence in the world.
It has offset some the hardships of tariffs, has opened up new job opportunities in the states that had once despaired of their economic futures, and made it possible to compete with countries that believe slave wages and labor are the future of the world economy.
For trucking, this, of course, means more jobs in shale basins, loading docks, and hubs coming online across the country. It also might mean a stabilization in rates in other sectors as the demand for drivers forces employers to make hard choices about the kind of employees they want.
All of that said, we must continue to pursue all forms of energy independence, so we don't choke on the fumes of our new found success. Too often, we have raced ahead economically only to become complacent with the world we have created. The trick is to have moved on to the next thing by the time our competitors have figured out our secret.