Everybody’s favourite moment in TheGraduate is when the film’s hero is cornered by one of his parents’friends. The older man’s advice to Benjamin Braddock consists of justone word – “plastics”. Something similar keeps happening to me atinternational conferences. I will be minding my own business, when adelegate will get up with a gleam in his eye and announce portentously –“shale gas!”
Thisconference chatter is a reflection of growing excitement in the US andEurope at the idea that we may have discovered a large part of theanswer to one of the most vexatious problems in foreign and economicpolicy – energy security.
For decades, American politicians havevowed to pursue “energy independence” and to free the US from relianceon foreign supplies. Yet the reality was that America was facing afuture of growing dependence on oil and gas from a variety of unstable,unfriendly and autocratic countries. Meanwhile, the European Union hasbecome increasingly paranoid about its reliance on natural gas suppliesfrom Russia – particularly given the Russian propensity to exertpressure on its neighbour, Ukraine,by cutting off gas supplies. Just to add to the frustrations for the USand Europe, one of the very few alternative suppliers of natural gas isIran.
Acrossthe globe: Read the FT’s international affairs columnist’sauthoritative and lively commentary
Ithas long been known that the US is sitting on potentially huge suppliesof unconventional shale gas. But until recently, these reserves werevery hard to exploit. Now, however, technological breakthroughs meanthat many of the economic and technical concerns about exploiting shalegas reserves are being dealt with. Over the past three years, Americanproduction has soared. This year, the US overtook Russia to become theworld’s biggest gas producer for the first time in a decade.
Theresult is that the shipping terminals that the US built to receiveliquid natural gas from overseas are now lying virtually empty. The riseof shale gas, which can be used to produce electricity, reducesdependence on domestically produced, but dirty, coal. If cars powered byelectricity or gas improve, shale gas would also reduce reliance onMiddle Eastern oil.
Both the EU and China are excited by the ideathat they too may soon enjoy a shale gas bonanza. Chinese foreign policyhas increasingly been driven by the need to secure energy supplies. ButChina looks as if it may have its own shale gas reserves, and hassigned an agreement with the US to look into exploiting them.
Theexcitement in Europe is even more pronounced. Just as North Sea oil andgas supplies are running down, the British are hoping that they maydiscover exploitable supplies of shale gas in Wales and north-westEngland. The Poles, who have their own special reasons to fear energydependence on Russia, also think they have exploitable reserves. RadekSikorski, the Polish foreign minister, recently visited Houston to talkto the big US energy companies about shale gas.
Even if Europeanreserves are not as promising as some hope, the EU still stands tobenefit indirectly from American shale gas. Supplies of liquid naturalgas from Africa and the Gulf, which might have gone to the US, are nowbeing redirected to Europe – reducing the Union’s dependence on Russiangas.
The geopolitical effects of all this may be already beingfelt. In recent months, western officials have noticed a distinctly morefriendly tone in their dealings with Russia. The Russians have signed anew nuclear arms reduction treaty with the US, accepted the idea oftougher sanctions on Iran and responded to the air crash on Russian soilthat killed the Polishpresident and his entourage with unexpected openness andsensitivity.
Some western officials attribute this change in tonein the Kremlin to the US altering its position on missile defence;others credit the growing influence of President Dmitry Medvedev. Butsome think that Russia is already adapting its foreign policy inresponse to the sharp fall in the price of gas and the shift on worldenergy markets.
Of course, there are shale gas sceptics. Someveterans of the energy industry point out that there have been falsedawns before – miraculous new sources of energy that disappointed in theend. It is true enough that most miracle cures fail – in energy, as inmost other walks of life. But it is also true that predictions in the1970s that the world was “running out” of fuel were disproved by acombination of technological advances and new discoveries – preciselythe combination offered by shale gas.
Some environmentalists arealso less than delighted by the shale gas revolution. There are concernsabout environmental dangers posed to groundwater by the chemicals thatare used to extract the shale gas – and such fears will only beheightened by the oil spill offthe coast of Louisiana.
In the short term, increased use of gaswill make it much easier for the US and Europe to cut emissions ofcarbon dioxide, because gas is much less polluting than coal. On theother hand, shale gas is still a fossil fuel and produces greenhousegases. For those environmentalists who dream of a future powered bywindmills and solar panels, the dash for gas is a distinctly mixedblessing.
Of course, shale gas cannot be a complete answer to thewest’s energy security problems – far less to climate change. But in aworld that is not short of bad tidings at the moment, shale gas is awelcome piece of genuinely good news.
gideon.rachman@ft.com
Postand read comments at Gideon Rachman’s global affairsblog
More columns at www.ft.com/gideonrachman