Sorry I’m late on this one, but for those who haven’t seen it, well worth paying for. This is the taster from Foreign Affairs.
Good news about energy is rare. Energy use and its cost are rising worldwide, most countries remain dependent on oil imports, and little progress has been made toward curbing climate change. So the world should take notice of the recent dramatic increase in estimates of unconventional sources of natural gas in North America and elsewhere, perhaps the greatest shift in energy-reserve estimates in the last half century. In the past few years, thanks to technological advances, vast amounts of natural gas — particularly gas trapped in underground shale basins — have become economically viable.
This development is an unmitigated boon for consumers interested in affordable energy, environmentalists looking for energy sources that emit less carbon dioxide than either oil or coal, and governments that hope to reduce the political and market power of today’s major oil- and gas-producing countries. The prospects for a greatly increased global supply of natural gas have dramatic implications for both international energy markets and the energy policies of individual nations. Over time, natural gas use will expand into the power sector and may then displace oil in the transportation and chemical sectors. As more natural gas becomes available and more of it is traded, the regional gas markets that exist today may well merge into a more integrated and open international gas market with a single price.
Countries that import natural gas should anticipate more competing sources of it, which will lower prices and reduce concerns about the security of the gas supply. No longer, it seems, will the world be dependent on a few nations — Iran, Qatar, Russia, Saudi Arabia, and Turkmenistan — that control the bulk of conventional natural gas reserves. Countries that produce natural gas will need to adjust to lower revenues from natural gas exports; for some of them, the adjustment may be quite severe and potentially destabilizing. As gas acts as a substitute for oil, demand for oil will fall, putting downward pressure on oil prices. This will lessen, but certainly not eliminate, the geopolitical influence that major oil-exporting countries enjoy today. It is perhaps a permissible exaggeration to claim a natural gas revolution. But like all revolutions, whether and to what extent the benefits are realized will depend on how rapidly the economic and political systems adapt to the change.
Foreign Affairs is an example of what I mean when I say that the shale gas is a story too important to be left to the “energy experts”. It’s also what I mean by saying shale gas is much more important than that it changes everything. Here in the UK, we don’t need Chris Huhne, or far worse, Ofgem, to tell us that gas is insecure, or volatile, or years away or bad for the water so let’s forget about tens of billions of pound of tax income just to be safe.
What we need is an informed view from political and economic actors outside of the narrow enery sphere who don’t like to be contradicted and mostly wish shale would just go away. We need Cameron and Hague and Osborne from the UK to get involved and start telling us why we should or should not embrace gas. The entire UK political system needs to adapt to this change. To the true Englishman as Jeremy Paxman noted, any change at all is a change for the worse. But the coalition is a change, too early to say for what, but it does signify that change can be quick. One day someone in the UK government will wake up and realise that shale can transform the entire economic and political system and help the government meet not only climate but overall economic, and thus political, goals