Cheap Energy Matters

Christian DeHaemer

Written By Christian DeHaemer

Posted June 22, 2024

The productivity in the U.S. has jumped compared to the EU and the UK.

Chart from the FT:

There are theories as to why this is.  They range from long vacations, the protestant work ethic, less red tape, and workers’ unions.

The real answer is fracking.  From an article in the Economist circa 2012: 

“AMERICA’S “unconventional” gas boom continues to amaze. Between 2005 and 2010 the country’s shale-gas industry, which produces natural gas from shale rock by bombarding it with water and chemicals—a technique known as hydraulic fracturing, or “fracking”—grew by 45% a year. As a proportion of America’s overall gas production shale gas has increased from 4% in 2005 to 24% today.”

This corresponds to the chart above which shows the difference in productivity starting around 2009.

Of course, Germany closed its nuclear power plants and the Russia/Ukraine war exacerbated the situation.  Cheap inputs – whether wages or energy – matter.

All the best,

Christian DeHaemer

Senior Editor, The