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Government Played Critical Role in Shale Gas Boom

Today, the Washington Post had an insightful op-ed highlighting the large and critical role federal spending played in the boom in shale gas drilling:

Many often point to the shale gas revolution as evidence that the private sector, in response to market forces, is better than government bureaucrats at picking technological winners. It’s a compelling story, one that pits inventive entrepreneurs against slow-moving technocrats and self-dealing politicians.

The problem is, it isn’t true.

The breakthroughs that revolutionized the natural gas industry — massive hydraulic fracturing, new mapping tools and horizontal drilling — were made possible by the government agencies that critics insist are incapable of investing wisely in new technology.

(The piece also mentions that some of the research was performed at the Energy Research Center in Morgantown, WV.)

The positive role of government spending in product innovation is something I’ve pointed out here and here. Let’s hope that Jared Bernstein is right: that this op-ed will “put to rest the uninformed debates about why the government shouldn’t pick winners, and how markets know best, and all that gov’t can do is cuff the invisible hand, yada, yada.”

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