New oil capacity changes everything

Forget America’s fiscal cliff, Europe’s currency troubles, or the emerging-markets slowdown.

The most important story in the global economy today may well be some good news that isn’t yet making as many headlines — the coming surge in oil production around the world.

Until very recently, our collective assumption was that oil was running out. That was partly a matter of what seemed like geological common sense. It took millions of years for the Earth to crush plankton into fossil fuels; it is logical to think that it would take millions of years to create more. The rise of the emerging markets, with their energy-hungry billions, was a further reason it seemed obvious we would have less oil and gas in 2020 than we do today.