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“The shale revolution has been very much a “made in America” phenomenon. In no other country can landowners also own mineral rights. In only a few other countries (such as Australia, Canada, and the United Kingdom) is there a tradition of an energy sector featuring many independent entrepreneurial companies, as opposed to a few major companies or national champions. And in still fewer countries are there capital markets able and willing to support financially risky exploration and production.”
Will Europe And China Follow?
How easy will it be for others to join the revolution? The gentleman from Citi does not foresee many problems:
“US recoverable shale resources constitute only about 15 percent of the global total…It is highly likely that Australia, China, Mexico, Russia, Saudi Arabia, and the United Kingdom will see meaningful production before the end of this decade.”
The CEO of one fracking pioneer thinks otherwise:
“True, China and Europe sit on vast shale resources (in China’s case, possibly containing more natural gas than US reserves). But those resources won’t get extracted anytime soon. Since other countries cannot sustain thousands of independent oil and gas companies, their resources must be exploited by bureaucratic, slow-moving national companies and international giants.”
In the US, major oil companies were blindsided by the revolution. Only smaller firms, who must “innovate or die”, led the way.
Fracking And Climate Change
For a relatively mild case against fracking, Foreign Affairs turns to the head of the Environmental Defense Fund (EDF). His primary concerns are pollution (air- and waterborne) from new wells and the widespread release of methane, a more potent global warming accelerator than carbon dioxide. Yet these can be overcome. For example, a study commissioned by the EDF ”found that using currently available technologies alone, 40 percent of methane emissions could be eliminated over the next five years for less than a penny per thousand cubic feet of gas produced” — or less than 1% of the cost of a thousand cubic feet, even at its lowest price.
Fear of Fracking
What EDF’s president can’t seem to explain is the fear and loathing of this revolutionary technology that has led both France and Germany to put indefinite bans on fracking. Even the State of New York imposed a ban in spite of its ample reserves. If the president of a major environmental advocacy organization can’t make a stronger case, it’s hard not to suspect that much of the anti-fracking hysteria is based on ideology and junk science. The great irony, of course, is that shale gas has enabled the US to dramatically reduce its carbon dioxide emissions, doing more than any renewable energy sources to achieve exactly the objective environmentalists cherish.
Shale Races Ahead of Electric Cars and Nuclear Energy
Rounding out its energy package, Foreign Affairs includes a look at the potential of electric cars and nuclear energy to provide alternatives that reduce dependence on fossil fuels. Although clearly written by boosters of those technologies, the authors of the two articles don’t provide much grounds for optimism. The Minnesota professor making the case for electric cars admits that the problems of battery technology make it unlikely that electric cars will have the range of their conventional counterparts before 2030. What he really seems to want is revealed in his observation that “If policymakers took the politically unpopular step of taxing people for the carbon their cars emit, electric vehicles would capture a larger market share.”
Meanwhile, the nuclear engineers give little reason to expect any change in the politics that make it so difficult to build new nuclear power plants. So it would seem that the future belongs to shale, at least in the United States of America.
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