Small Matters: Natural gas boom an example of effective innovation

American entrepreneurship and ingenuity have made the United States the wealthiest economy in the world and will continue to do so in the future if it is not smothered by taxes and unproductive regulation.

The boom in natural gas is another good example of this. The hydraulic-fracturing technology was invented and developed in Texas, and it is the key to unlocking the estimated 900 trillion cubic feet of shale gas available in the United States (and the estimated 6,000 trillion cubic feet globally). Shale gas alone could provide 100 percent of U.S. gas consumption for decades and, added to the existing reserves of nearly 300 trillion cubic feet, has driven the cost of natural gas down by two-thirds.

The technology is effective, but not necessarily environmentally benign, as drilling a single shaft will use millions of gallons of water and tens of thousands of gallons of various chemicals that could pose a threat to water resources even though "fracking" occurs well below the water table. The new technology will be improved and its impact on the environment carefully monitored as this resource is developed, but it is comforting to know that our energy future is brighter for decades to come.

Western Pennsylvania has benefited from the gas boom. I became an investor in gas wells as part of my retirement investment, as many others did. It was great for a while, when gas sold for as much as $9 per million cubic feet. Now the price is under $3, a huge decline. So I'll have to work longer to beef up my retirement income, but the benefits to this are shared widely. Natural gas prices don't get the media exposure that gasoline does, but millions use natural gas to heat their homes and the cost is down substantially. Gas is now very competitive with coal for generating electricity and much cleaner and environmentally friendly and, in the longer haul, can help keep electricity prices lower.

There are jobs, too. Job creation of course is strongest in the "drilling boom." Once the wells are in place, relatively few people are needed to keep operations running, but there will be a constant source of revenue for the state as natural gas becomes more widely used as a fuel to generate electricity, heat homes, make chemicals, and power vehicles.

According to one industry source, during 2010, Pennsylvania Marcellus natural gas development generated $11 billion in regional gross domestic product, paid more than $1 billion in state and local tax revenues, and supported nearly 140,000 jobs.

Many new firms were created to serve the industry, some were tech firms, but many were more ordinary, providers of jobs and incomes for many individuals (in addition to more business for existing firms).

But that boom may be about over, as falling gas prices make many drilling projects unattractive. Many wells that have been drilled are not yet producing, lacking pipelines to carry the gas.

Many firms sprang up to carry water, process wastewater, house and feed employees, build roads, and otherwise support the companies and workers that have been attracted to the region.

Landowners became millionaires because of the gas under their land and many entrepreneurs became wealthy as well as providing services. But their business activity will fade as drilling activity matures.

Still, our energy future is much brighter now as a result of the entrepreneurial activity of these energy firms, a benefit that we will enjoy for decades to come.