That's good news. But my point is, if production slowed in the event prices fall below $50, the American economy won't collapse.
More important: Virtually all consumers and producers will benefit from lower energy costs. Households could save as much as $100 billion because of today's lower fuel costs. Business fuel savings will also be substantial. The result is a much more competitive U.S. (despite our high tax rates).
Retail gasoline at the pump is down around $3.15 a gallon from nearly $4 a little while back. Don't you agree that's a good thing?
All these factors will increase U.S. economic growth, not reduce it. Basically, the fracking revolution has delivered a powerful and positive supply shock to the economy. It means that more output increases real growth and reduces inflation for any given increase in nominal GDP — the exact opposite of what we saw in the 1970s.
As a percentage of energy consumption, U.S. energy production has increased from 69 percent in 2005 to 85 percent currently. We're almost self-sufficient right now. So a related knock-on effect is the significant reduction in energy imports, which is lowering our trade gap, strengthening King Dollar, and increasing our economic growth.
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Let me help all those analysts who have lost their minds in this stock correction. We're witnessing a big outward move of the energy supply curve. By nearly doubling our oil output in recent years, it's surprising the oil-price break hasn't come sooner. It has very little to do with falling demand. In fact, the International Energy Agency predicts world energy consumption may only drop two-tenths of 1 percent — hardly measurable.
Finally, a political message: Falling energy prices are so good for the economy that a new Republican Congress, in its first 90 days, should put a bill on President Obama's desk authorizing the Keystone Pipeline, opening federal lands to energy development, and ending oil export restrictions. Totally pro-growth.
Let the GOP dare the president to veto it.
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Commentary by Larry Kudlow, a senior contributor at CNBC and economics editor of the National Review. Follow him on Twitter @Larry_Kudlow.