One of the most valuable economic insights is that human creativity is The Ultimate Resource. (The great economist Julian Simon wrote a book by that name.) It follows that as long as we are free to use our creativity, we don’t have to worry about running out of resources. Truly, human creativity makes resources of mere stuff, because only when people figure out what to do with some particular stuff does it become a valuable resource.

The world has been experiencing a powerful illustration of this fact with respect to oil.

For over a century, people have been worrying about running out of oil. The Wall Street Journal published an entertaining report on the subject last September, leading with some noteworthy strong, and wrong, statements by leading experts about how little oil we have left. At this link, click on the circles below the first photograph to see them.

In our day the United States has become once again the world’s leading oil producer—we now produce more oil than Saudi Arabia—thanks to human creativity that has turned mere stuff into a valuable resource.

The stuff I mean is rock, shale rock. There are oceans of it down in the ground, miles below the surface. In that rock, oil is trapped, lots and lots of oil. But until about a decade ago, people did not know how to get at that oil; after all, it was trapped in the shale. So shale was not a resource.

Then came the marriage of two technologies, two techniques developed by human creativity, and married by human creativity: hydraulic fracturing (“fracking”) and horizontal drilling. The first involves breaking the rock by injecting it with water and some sand and chemicals at very high pressure. The sand holds open the tiny fractures so that the trapped oil can escape. This technique has been known since 1949, but it was not especially useful in wells that could only be drilled vertically and hence could break open only a little bit of shale.

The second technique, horizontal drilling, involves drilling sideways out into the shale from a vertical well. (How they manage to do that I don’t know.) It allows far more shale to be reached and fractured, so that far more oil can escape and rise through the well.

Voila! Thanks to The Ultimate Resource, human creativity, what was once useless rock far down in the ground has become a valuable natural resource, one able to satisfy human needs “for decades, if not centuries,” according to Matt Ridley.

I don’t mean to say that, thanks to the shale revolution, we’ll never run out of oil. Definitely not. We’ll never run out of oil because The Ultimate Resource, human creativity, will find a better energy source than oil before we ever run out of it. Saudi oil minister Sheikh Zaki Yamani made this wonderfully insightful statement in the 1970s: “The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.” The Stone Age ended because of The Ultimate Resource. Barring natural or political catastrophe, the Oil Age will, too.