Greatness and Energy: A Key Connection

Greatness isn’t possible without great energy. If you look at the relationship between energy consumption and economic prosperity, they’re quite closely linked. From manufacturing to air conditioning, almost every aspect of our lives relies on electricity. The cheaper energy is, the wealthier we tend to become.

In fact, the U.S. currently produces more oil and gas than both Saudi Arabia and Russia combined, making it the top energy exporter globally. This abundance helps the U.S. handle tensions, like those in the Strait of Hormuz. Sure, gas prices might be high now, which is tough for many, but things could actually be worse.

The baby boomer generation recalls the energy crises of the 1970s when gasoline prices surged. There were times when gas was scarce, creating chaos at the pumps.

But those crises were unusual in the broader context of U.S. history. Thanks to production advances, energy prices here have been low, and often, they decline over time.

Going back to the 19th century, it was pioneers like Edwin Drake who began oil drilling and set the stage for American energy independence. For much of the 20th century, oil prospectors were free to drill, contributing to a robust energy landscape.

However, in 1971, President Nixon decided to impose price controls, which was a major error. This led to limits on American production and created shortages. Meanwhile, OPEC took the opportunity to raise prices.

The pivotal moment came in 1973 during a geopolitical conflict when Arab OPEC countries placed an oil embargo on the U.S., and price controls prevented American producers from alleviating the situation. The impact was felt nationwide.

Luckily, in 1981, President Reagan lifted those price regulations. Afterward, market dynamics kicked in again, boosting production and lowering prices.

The takeaway is clear: government control leads to scarcity. If we had a more free-market system, our wealth would be even greater.

Wealth is undoubtedly part of what makes America great. As historian David Potter noted in 1954, it’s about being rich.

Abundance, of course, needs ongoing innovation. That’s where freedom plays a vital role—being able to think creatively and take risks lets new ideas flourish.

While we often notice advances in technology all around us, innovation is also happening beneath our feet—specifically in the form of hydraulic fracturing. This method allows for increased oil and gas extraction by injecting water and chemicals into wells, a complex but effective process.

Journalist Gregory Zuckerman captures this story in his book from 2013, “Frackers,” exploring how the concept has existed for a while but only gained traction in the early 2000s when companies started to combine it with horizontal drilling. This breakthrough has allowed deep drilling, with the ambition to unlock even more energy potential in the future.

George P. Mitchell, a central figure in Zuckerman’s narrative, shares a vision akin to that of other great innovators like Henry Ford. Interestingly, the initials “P” in Mitchell’s name reference “Phidias,” linking back to his Greek heritage.

Another notable name in this field is Harold Hamm, a significant figure who is a strong supporter of Donald Trump and has guided the current Energy Secretary. Hamm faced skepticism during his company’s IPO in 2007, as many saw hydraulic fracturing as a long shot. But eventually, investors recognized its potential, leading to a dramatic increase in the company’s value. In a free market, when innovation works, it gets rewarded.

This background gives context to the rise in U.S. oil production over the past two decades, playing a role in America’s overall greatness.

Other countries have tried to replicate this success but have largely fallen short. Zuckerman points out that they may lack the essential elements that fueled America’s energy revolution, like a culture of entrepreneurship and incentives that encourage extensive trials and errors leading to breakthroughs.

He further notes that the U.S. has a well-established energy infrastructure, including pipelines, a wealth of geological data, and access to capital that makes drilling feasible. The workforce’s experience also surpasses that of other nations.

Moreover, Americans retain ownership of mineral rights linked to their land—facilitating quicker drilling compared to countries where the government controls those rights.

It’s rare to find another nation with the same level of commitment to free enterprise, particularly regarding resource development. While there are challenges within the American system, it remains one of the best environments for business globally.