Abundant, affordable, American supplies of natural gas from shale have transformed the nation’s economic landscape, driving investment, producing jobs, creating a manufacturing renaissance and increasing household incomes by $1,200 a year (and possibly up to $3,500 by 2025).
Across the pond, European thought leaders and corporate executives are deciphering what America’s shale boom means, its impact on the continent’s economic future and even the desirability of duplicating the U.S. energy revolution.
In a commentary in The New Statesman, Nigel Knowles wrote that the U.S., not China, is – and will remain – the world’s economic superpower:
The principal reason for this geo-political shift is largely driven by the USA’s current epoch-defining energy boom, courtesy of the discovery of huge shale gas reserves and the advent of fracking technology.
Natural gas has ushered the U.S. into a “new era of prosperity” likely to benefit countries around the globe, Knowles wrote, even if shale gas may prove inappropriate in the United Kingdom.
But other Europeans appear worried that the U.S. shale gale has given American manufacturers an unbeatable competitive advantage.
“The loss of competitiveness is frightening,” Paulo Savona, head of Italy’s Fondo Interbancario, told The Telegraph. “When people choose whether to invest in Europe or the US, what they think about most is the cost of energy.”
European natural gas prices are three times higher than in the U.S. and electricity prices are double, a perhaps deadly combination for continental industry. “I can’t imagine anyone making an energy intensive investment in Europe,” ENI CEO Paolo Scaroni said at a recent Council on Foreign Relations event.
Industry experts voiced similar concerns at a European chemical conference in early October, with one industry analyst predicting Europe’s competitive disadvantage in chemicals such as ethylene under threat from the shale gas boom at least until 2020.
Data in a recent IHS report suggest that European competitive concerns may be justified. It found the U.S. chemical industry will enjoy “a profound and sustained competitive advantage that is expected to last for decades.” According to IHS projections, North American basic chemical and plastics production is expected to more than double by 2020 while Western Europe’s will fall by about one-third. As American Chemistry Council President and CEO Cal Dooley also observed:
Natural gas supply growth is leading to unprecedented investment and capacity expansion in the United States, in stark contrast with other areas.
Still, Europe may resist embracing shale gas development despite its economic advantages. The European Parliament recently voted to impose stringent environmental requirements on shale gas exploration, despite concerns that the rules will kill the prospect of cheap energy. According to Struan Stevenson, a conservative member of the European Parliament:
Targeting exploration in this unnecessary way amounts to stifling the potential benefits at source. We must stop this over-zealous attempt to place a dead hand on the process of exploration before it even gets going.
As in Europe, regulation remains a threshold issue in the United States as well. ACC has told Congress that government policy decisions will affect whether the U.S. is able to capitalize on the benefits of natural gas.