David Brooks: Shale Gas Revolution
The United States is a country that has received many blessings, and once upon a time you could assume that Americans would come together to take advantage of them. But you can no longer make that assumption. The country is more divided and more clogged by special interests. Now we groan to absorb even the most wondrous gifts.
A few years ago, a business genius named George P. Mitchell helped offer such a gift. As Daniel Yergin writes in "The Quest," his gripping history of energy innovation, Mitchell fought through waves of skepticism and opposition to extract natural gas from shale. The method he and his team used to release the trapped gas, called fracking, has paid off in the most immense way. In 2000, shale gas represented just 1 percent of American natural gas supplies. Today, it is 30 percent and rising.
John Rowe, the chief executive of the utility Exelon, which derives almost all its power from nuclear plants, says that shale gas is one of the most important energy revolutions of his lifetime. It's a clichÃ© word, Yergin told me, but the fracking innovation is game-changing. It transforms the energy marketplace.
David Fuller's view Shale gas is indeed a 'game changer' for the USA. And shale oil, which David Brooks does not mention, is even more important because crude is by far the more expensive fuel.
In another triumph for US technology, george mitchell pioneered the economic extraction of shale gas and oil. Consequently, the USA has a considerable lead in developing shale reserves but a number of other countries are blessed with rich deposits, not least China.
Consequently, the major beneficiary of fracking technology will be the global population. Until just a few years ago, the risk of a serious and depression-inducing global energy shortage has moved from a probability in our lifetime to a negligible risk. Indeed, it should never happen.
Global reserves of shale gas and oil are sufficiently large - greater than remaining known reserves of conventional oil and gas - that they will last for many decades. Meanwhile, the march of technology should ensure that all sources of oil and gas are fully developed, as required, provided politics do not get in the way.
Environmentalists will fret over the additional use of fossil fuels, and not without some justification in terms of pollution as both a health hazard and also a contributor to climate change. Consider how much the health and environmental outlook would look without shale gas and oil, requiring the world to increase dramatically its usage of coal - an environmental polluter in a league of its own.
The idea that the global economy can somehow develop successfully, largely on renewable energy at some point within the next decade or two, is naÃ¯ve in the extreme. Even though we use energy more efficiently the modern world finds more uses for it. Most estimates that I have seen project a dramatic increase in energy consumption over the next few decades.
This makes sense to me when we consider projections for Asian-led GDP growth. Therefore the world will need all the conventional and non conventional oil and gas that it can produce, alone with clean coal technologies, various renewables and nuclear.
The International Energy Agency's 2011 World Energy Outlook will be released in London on Wednesday. I look forward to seeing the IEA's futuristic forecasts for both energy consumption and prices and assume that they will be considerably higher.
Certainly GDP growth will ensure higher energy consumption. However, with energy production also rising, my guess is that energy prices will rise, more often than not, at a considerably slower rate in real (inflation adjusted) terms. Inevitably, much will depend on the politics, not least green subsidies of renewables. Nevertheless, if political influences are favourable or at least no worse than neutral towards all forms of energy development, I maintain that the USA could be energy independent twelve to fifteen years from now. Few 'game changers' could be more important.