brown on green, A Regular column about finances

When Will the Economy Get Better? The X-Factor

The U.S. economy continues to plug along at less than 3% GDP growth. While new jobs are being created, it is slow, and projections tell us it will be at least a year or more before unemployment drops to 6.5%. Is there any good news?

Yes. The boom in shale oil and gas exploration could be the X-factor that gets the sluggish economy moving again. Many experts project the United States will become the world’s top producer of oil by 2020, and some think it will happen sooner. Independence from imported oil is expected by 2030. Natural gas should begin exporting within a few years due to the abundance discovered within our own borders.

Some factors helping the U.S. become oil-independent are not related to the shale oil boom. The sale of more hybrid cars has begun to reduce the demand for oil. New, tougher mileage standards for automobile manufacturers will be a significant factor. Even the use of solar and wind energy is reducing oil usage, and trucking companies are switching to natural gas to power their fleets.

This boom is already affecting our economy, and its effects will begin to snowball over the next few years. The abundance of natural gas has caused many factories to shift operations from overseas to return home. This is especially true of manufacturers that use gas in their production process.

Due to the low cost of natural gas, diesel truck fleets are quickly being converted to this new energy source to power their trucks. This has the twin effect of reducing the consumption of petroleum and putting downward pressure on the price of crude oil.

Producing more oil domestically will also push the price down and stabilize gasoline prices. Many believe this could push gasoline prices to around $3 per gallon by 2016. Keeping gasoline prices lower and stable will stimulate the economy as people spend less on gasoline and more on goods and services.

When will this X-factor take place? Many economists believe we will begin to see the effects of these changes by 2016 or 2017. An improving economy lifts all boats, so, hopefully, recovery will take place sooner rather than later. As we get Americans working again, our churches and ministries will enjoy the effects of a blossoming economy.

David Brown, CPA, became director of the Free Will Baptist Foundation in 2007. Send your questions to David at david@nafwb.org. To learn how the Foundation can help you become a more effective giver, call 877-336-7575.