President-elect Donald Trump is determined that America exploit its vast shale oil and gas reserves. The result will be an energy boom with global implications, some especially problematic for Canada.
Hydraulic fracking has already had an immense impact on America’s economy. The Brookings Institution reports that, from 2007 to 2013, energy consumers gained US$74 billion a year in lower energy costs brought by increased fracking. According to the National Bureau of Economic Research, between 2012 and 2014, energy development and lower energy costs generated US$3.5 trillion in GDP and 4.6 million new jobs. This despite a collapse in oil and gas prices.
The appointment of pro-fossil-fuel climate skeptics to key positions in the new administration sent a clear signal to the stock markets: Energy will be a key driver of jobs, economic growth and national security. Canada should draw two lessons from this looming tidal shift, both of which lead to the same policy conclusion.
The first lesson is that countries blessed with vast natural resources profit enormously when they have the common sense and resolve to develop them. That requires making the economy and the welfare of their citizens a priority. It does not have to mean sacrificing safety or environmental protection. To the contrary, governments should rely on independent regulatory recommendations based on science and economics. But it does imply abandoning unsound policies grounded in ideology or failed political promises.