The Shale Revolution continues to wreak havoc as revolutions are wont to do.
The abundance of U.S. natural gas, in many ways a more satisfactory fossil fuel than either coal or oil because of its lesser emissions, has dynamited the whole worldwide energy market. Whether or not the Obama Administration wants it, the export of oil and gas is going to be a function of the new energy picture with the growing economic pressure to sell off our low priced gas to a world market which hasn’t yet taken advantage of the new mining technologies.
Along with the flagging economies of Europe, and now China, and subsequent lower demand, energy prices are under attack everywhere. The stock markets, long dependent on high energy costs and their very profitable producers, are lurching under the torpedoing of the old price structures. Fuel economies, sometimes at the insistence of government fiat as in the American automobile industry, are also finally having their effect and slowing growing energy demand.
In the long run, there is every reason to hope and believe that lower energy prices will be an enormous fillip for the U.S. and the world economies. But, as Maynard Milord Keyes once quipped, in the long run, we will all be dead. Projections of energy demand and supply have in the past been notoriously wrong. And they may be again. But for the moment, what looks likely for several years if a continuing low price for energy. The U.S. which has always prospered on low energy costs, as compared with Europe, is likely to benefit from this new situation.
Geopolitical developments overseas, for the moment at least, seem to be bolstering this new abundance of energy. Iraq’s fabulous oil and gas reserves are coming back onstream after so many years of war and destruction. Pres. Obama’s “deal” with Iran is likely to see sanctions against its sales of oil lifted with new entries to the market.
Most important has been the effort of our friends the Saudis to regain their role as the marginal producer and dictator of the international market pricing. They have opened all the valves and are producing and marketing at record levels. The intent, without doubt, was to hammer the American shale gas and oil producers with their higher costs than those on the Persian Gulf. But while there have been some difficulties and cutbacks for the U.S. producers, the shale oil entrepreneurs have been adept at coming up with new technological fixes which have in the main maintained their role in this new struggle for prices and markets.
Meanwhile, much propaganda and pure and simple idiocy dominates much of the talk about energy and its application. Electric cars, for example, may eventually become a reality because of new battery developments. But recharging the electric car off their baseboard plug – if that becomes the reality – is going to demand that more electricity be produced somewhere and by someone with some fuel. Coal which has until recently dominated the electrical generating plants, about 60% of the total energy consumption, is fading as more and more quick fix gas generators go into service and environmental constraints demand cutbacks in coal emissions. The pain in the old and often poverty-stricken coal mining areas is something the rest of the country is going to have to be attended [and be paid for].
But, returning to our original point, progress is rarely achieved without considerable pain – for some part or other of our society. And it is clear that is going to be case as the Shale Revolution with almost daily announcements of increased reserves is no exception. Government subsidies for wind and solar will continue to feed the trendy enviromentalists’ pressure on more innocent lawmakers. That, too, is a burden which the taxpayer appears inevitably going to bear.