Shale Gas Shock

Oil & Natural Gas / Gas Shales / Economics

Date posted: 05/05/11

By Matt Ridley, 2011 Shale gas is proving to be an abundant new source of energy in the United States. Because it is globally ubiquitous and can probably be produced both cheaply and close to major markets, it promises to stabilize and lower gas prices relative to oil prices. This could happen even if, in investment terms, a speculative bubble may have formed in the rush to drill for shale gas in North America. Abundant and low-cost shale gas probably will "where politics allows" cause gas to take or defend market share from coal, nuclear and renewables in the electricity generating market, and from oil in the transport market, over coming decades. It will also keep the price of nitrogen fertilizer low and hence keep food prices down, other things being equal. None the less, shale gas faces a formidable host of enemies in the coal, nuclear, renewable and environmental industries - all keen, it seems, to strangle it at birth, especially in Europe.