Energy opportunities like these were not on our radar 10 years ago.  And Energy seems to drive nearly everything.  Manufacturing didn’t seem to be in our future either…

 Comeback: Why the US Sits at the Brink of a New Boom

In 2005, Charles Morris became convinced that a debt crash was inevitable. In 2006, he began his 10th book to make and explain his prediction. In 2007, he delivered the manuscript, and at the beginning of 2008, Public Affairs Books published “Two Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash,” which received almost no notice at all until The Economist magazine wrote about it in March. Six months after that, the deluge.

 What’s remarkable is how well Morris’ analysis of the crash, written before the crash, holds up half a decade after it. So when I saw that he was calling his newest book “Comeback,” I felt obliged to take a look…

Charles Morris: It’s the best-kept secret in the economics media: The United States is on the brink of a period of solid, long-term growth rivaling that of the 1950s and 1960s. It is not a finance-driven, self-destructive boom, like the 2000s’ housing bubble. No, the new economy will be durably grounded in energy and heavy manufacturing, even though it will take several years to come to full fruition.

There is no question that the financial crash has left deep economic scars. But the fundamentals will turn in America’s favor and when they do, annual GDP growth should kick back up to at least the 3.3 percent average real growth rate that has prevailed since 1950. That’s far from a startling forecast for a recovery, but even at that level, the budget problems that have so paralyzed official Washington will shrink rapidly in the rear-view mirror as tax receipts grow, making debts and deficits shrink. The seemingly crushing post WWII debt — 120 percent of GDP — quickly dropped from the radar screens with growth in the 3-4 percent range in the 1950s. So what are the positive portents?

The Energy Boom Is Already Here

The most salient is the sudden emergence of the United States as a major energy producer. A recent U.S. Geologic Service study concluded that the Bakken Shale in North Dakota and Montana, already crowned as the U.S.’s largest-ever gas and oil reservoir, has far greater recoverable reserves than previously thought. At about the same time, a team from the University of Texas completed a well-by-well analysis of the Texas Barnett Shale — the most intensively developed shale field in the world — and confirmed that the fields can support decades of further development. The current official estimate — that by 2020 or so the U.S. will surpass Saudi Arabia in oil output, and Russia in gas — remains on track, and the country will be a major global energy producer far beyond that, which will do wonders for the U.S. trade deficit…

Energy production is a good job producer, offering classic blue-collar jobs at high pay to people without college degrees. Oil and gas rig workers can pull down $100,000 annual incomes before they’re thirty. Daniel Yergin, a leading energy analyst, estimates that the sector now accounts for 1.7 million jobs, including energy production itself, its direct supply chain, plus the multiplier effects from the additional spending power…

The collateral job creation is even more important, and it’s just getting underway. The big attraction is the low price of natural gas, the lowest-carbon fossil fuel, which can be produced profitably at about a third the price per unit of energy as other hydrocarbons… But it is also the raw material for plastics, Styrofoam, tires, sealants, adhesives, films, liquid crystal screens, nylons, polyesters — nearly everything around us…

But it goes far beyond chemicals. Nucor is the world’s most profitable steel company, and arguably the smartest. It has locked up long-term supplies of natural gas so it can shift to a highly efficient, but extremely energy-intensive, way of making iron that would not have been possible at the prices charged for conventional energy. Within a few years, all of its American plants will run on natural gas. U.S. Steel is experimenting with similar technologies…

Manufacturing Takes Off

The new American energy advantage dovetails neatly with other positive signs of an American manufacturing recovery. According to the Boston Consulting Group , Chinese worker compensation has been growing at an extraordinary rate: From 2000 to 2010, average wages in south China’s Yangtze delta, a manufacturing hotbed, jumped from $0.72 an hour to $8.62. American wages are still much higher, but so is American productivity, and the costs and time of long-distance shipping, along with the scarcity of Chinese land and that country’s endemic corruption, bring China and the U.S. to a rough competitive parity in all but the most labor-intensive industries…

Citi GPS, Citigroup’s economic analysis group, estimates that by 2020, America’s energy revolution will support as many as 3.6 million jobs, both in the energy sector itself, and including the new manufacturing development it will support. The Financial Times recently reported on the concerns in European economic ministries at the rapid pace at which heavy industries are shifting operations to the United States to take advantage of its reasonable labor costs and inexpensive energy…

There has already been a visible recovery in manufacturing jobs, up by more than 500,000 since the recessionary low point in early 2010. Some economists have scoffed at that as merely typical of historic recoveries. But manufacturing jobs did not increase at all during the relatively strong 2003-2007 recovery, and while the current recovery has been exceptionally weak, manufacturing job growth rivals that in the halcyon years of the late 1990s. So while it’s too soon for definitive statements, something does appear to be going on. And it will only build as long lead-time plant developments start coming on stream…

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