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JSPES, Vol. 37, No. 4 (Winter 2012)
pp. 415-467

The Natural Gas Revolution and the World’s Largest Economies

Robert W. Kolb

Loyola University

In the last decade, three interacting technological developments have revolutionized the production of natural gas resulting in a much expanded supply and much lower price. These technologies are hydraulic fracturing, directional drilling, and the worldwide build-out of liquefied natural gas (LNG) import and export facilities. Hydraulic fracturing and directional drilling are mainly responsible for the improvement in supply, while the richer LNG infrastructure is facilitating the worldwide transportation of gas and starting to knit the once fractured gas market into a truly world market. The consequences of these processes has dramatically different effects around the world, creating true winners and losers. This article assesses the impact of these natural gas developments on the world’s ten largest economies. It concludes that the United States is the largest beneficiary of these developments, followed by China, with Russia being the largest loser in the new world of natural gas.