Technological improvements in hydraulic fracking are making ‘America Great Again’ when it comes to its energy sector. Unconventional oil and gas reserves, which previously were deemed as ‘uneconomic to produce’, are being exploited on a massive scale.
Consequentially, the shale revolution has altered the international energy landscape, which has enabled cooperation between rivals Russia and Saudi Arabia within the OPEC+ framework. Furthermore, the flooding of the market with cheap natural gas is strengthening the fuel’s competitive position and replacing coal in the power generation market.
Also, innovations in renewable energy technologies are advancing at a rapid pace. Although wind and solar power have been around for some time, it wasn’t until prices dropped significantly during the past decade that installations skyrocketed across the world.
The share of renewables in the U.S. in the overall power production differs from state to state. While gas has become the primary source of electricity production, technological advancements are about to make fossil fuels more expensive and therefore uneconomic compared to renewables. The tipping point could come much sooner than certain utilities and investors are expecting, which could hit current investment plans for gas-fired power plants.
Innovations and cost reductions
In the 19th century, the growing consumption of coal was made possible by relative abundance and low production costs in the heartland of the industrial revolution. After the UK’s ancient forests were destroyed by the expanding human population, coal was the most straightforward alternative to power the steam engine and other innovations.