US Oil Production is Booming. Here’s The Catch
From Washington Post
By Brad Plumer
The United States is suddenly awash in fossil fuels. Oil output has risen to its highest level since 1992. Natural gas is booming, thanks to new and improved fracking techniques. Refined petroleum has become one of the country’s top exports.
Which means it’s time to start wondering… about “Dutch disease.”
Dutch disease isn’t some weird fungal infection. It’s an odd economic phenomenon that often afflicts countries rich in natural resources. Back in the 1960s and ’70s, the Netherlands discovered a large natural-gas field and began selling the gas abroad. That, in turn, drove up the value of the Dutch currency. And that currency rise, in turn, crippled Dutch manufacturers by making their exports more expensive. That’s Dutch disease.
Could the same thing happen in the United States? Perhaps, though we’re expected to contract a much milder version. In a new research note, JP Morgan economist Michael Feroli argues that in a few years, the boom in oil and natural gas could shrink the U.S. trade deficit significantly. That, in turn, could drive up the value of the dollar, which would in turn hurt U.S. manufacturing and other export sectors.
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