Economics

Should Europe be Fracking?

Oct 4, 2012 Daniel Gros

The global energy community is abuzz with excitement about hydraulic fracturing, or “fracking,” a newish technology that has opened formerly inaccessible reserves of so-called shale gas. But there are good reasons why Europe should refrain, at least temporarily, from jumping on the bandwagon.

BRUSSELS – The global energy community is abuzz with excitement about hydraulic fracturing, or “fracking,” a newish technology that has opened formerly inaccessible reserves of gas trapped in underground shale formations. The boom in this so-called shale-gas production has allowed the United States to become almost self-sufficient in natural gas.

Europe, by contrast, is clearly lagging. Exploration is proceeding only hesitantly and shale-gas production has not even started, prompting many observers to lament that Europe is about to miss the next energy revolution. Should Europeans be worried?

Critics of Europe’s apparent lack of enthusiasm for fracking miss two key points. First, Europe’s geology is different from that of America. There is a huge difference between potential deposits hidden somewhere in large shale formations and recoverable reserves that can actually be produced economically.

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0 Comments on this paragraph, 8 Comments on this article

Ronald Wagner Feb 16, 2013

European governments are leaning strongly toward fracking because it makes logical sense. It is a proven technology that has proven to be safe in several decades of use in America. Europe has failed to equal America's success in lowering CO2 emissions and coal pollution. In fact Europe is importing coal from America, which is quite irrational. Coal is the most polluting substance in the world. It causes more health problems than any other substance polluting the world. Any sincere environmentalist should gladly embrace cheap, clean natural gas as a replacement for coal and nuclear power. Natural gas can easily beat the price of any other fuel and is the obvious base power choice to support solar, wind, and geothermal power. I have 4900 reference stories on my blog that back me up.
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Mark Simmelkjaer Dec 13, 2012

America's land ownership/mineral ownership has accelerated the shale gas explosion. Europe's model that rely's on state action and not market incentives makes "unconventional" plays unlikely anytime soon.
-Mark Simmelkjaer
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Mark Pitts Oct 8, 2012

The fracking controversy reveals that the Left, as well as the Right, is willing to embrace anti-scientific beliefs to bolster their chosen policies. Specifically:

The sideways penetration that is characteristic of fracking occurs far-far below the level of aquifers. Thus, there is no theoretical reason to believe that fracking would have any more negative effects on aquifers than any other type of drilling. And the empirical data agree.
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Mark Pitts Oct 8, 2012

As fracking has proven, those predicting the imminent exhaustion of natural resources are, yet again, wrong.

The public has heard the scare-stories so many times before that no one is listening any more.
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Procyon Mukherjee Oct 5, 2012

We are dealing with some techno-economics where the new technology has transformed the pricing of natural gas vis-à-vis Europe, where the prices are still much higher due to the carbon credits. The natural gas exports from U.S. to Europe has surged but we need to also look at the picture together with coal as coal exports to Europe has also surged by 24% year on year; there is still some advantage in coal over natural gas in terms of pricing.

The question is should we allow incentives to operate in a market which is already over-supplied, or we look at how to time the auction of the new credits due next year.

Procyon Mukherjee
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james durante Oct 4, 2012

The issue is considerably more complicated:

1. in many instances, including the upcoming (December) auction of large tracts of the Monterrey Shale in California, the federal government controls the rights because of large Federal land holdings in the west. Much Monterrey shale is on BLM land. The Reagan-Bush-Clinotn-Bush-Obama/Romney Plutocracy is quite happy to auction off land at low prices without consideration of the environmental consequences

2. the environmental consequences: this is not merely a NIMBY issue; fracking creates toxic water byproducsts which must be held in containing ponds. Which toxic chemicals? Testing at a fracking site in Richardson Texas detected harmful quantities of "carbon disulfide, a neurotoxin at twice the state level for short-term exposure. Benzene, a known carcinogen, and Naphthalene, a suspected carcinogen, were both over state long-term exposure levels by more than 9 times and more than 7 times, respectively. Carbonyl sulfide, dimethyl disulfide and Pyridine were all detected above safe limits for long-term exposure."

3. Fracking has been shown to pollute subsurface water and aquifers.

4. Drilling and drill operation releases volumnous amounts of methane, a gas with many times the heat trapping effect of CO2.

No one expects anyone in a capitalist system to see beyond the cash at the end of their nose. But it's past high time to move toward real energy solutions and not the quick (cash) fix.
- Irene Dovas Oct 24, 2012
  
  "No one expects anyone in a capitalist system to see beyond the cash at the end of their nose. But it's past high time to move toward real energy solutions and not the quick (cash) fix."
  
  I agree. Fracking will cause huge problems for the public, who will end up suffering physically and who will end up having to pay the cleanup costs one way or another. Unavoidable methane leaks will be a problem until the proper infrastructure is in place.
  
  What's worrying is that as Mr. Gros states, "regulation of exploration and production are decided at the national level." Struggling European countries with the right geology may be more likely to take on fracking to boost their economic situation but the long-term costs, especially with the lack of investment in leak-plugging, will outweigh the short-term benefits. It would be better to invest in human capital than to exploit the environment. A great article that discusses ways developing countries can gain a LONG-TERM competitive advantage is located below, for those interested:
  
  http://www.becker-posner-blog.com/2010/09/higher-education-and-technological-advances-as-countries-develop-becker.html
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Zsolt Hermann Oct 4, 2012

The article is raising a lot of questions about environmental issues, ownership, distribution and so on.
Interestingly these issues will all solve themselves in a natural way.
The article itself suggest that due to the stagnating economy the need for further energy sources is actually declining in Europe, even China is slowing down, causing turmoil on the commodity market, affecting countries like Australia who thought they will continue sailing on the back of the exponential Chinese growth for decades...
In short this constant quantitative growth economic system which necessitates the total dependence on energy sources, fueling most if not all recent armed conflicts, geopolitical issues is slowing down and basically collapsing. This is not a surprise as the whole model is unnatural and unsustainable and it stared exhausting itself, and now has become self destructive.
Humanity will not have other options but to return to a necessity and resource based model, and here in terms of resources the "human resources", which today are showcased by social inequality, unemployment, depression, family and general social breakup, are more important than natural resources.
Thus the need for ever more energy will decrease, solving most of the present questions related to it.
What humanity should be concentrating on is how to organize, plan the transitional period in between the collapse of the present one, and the building of a new more natural, adapted system so instead of unpredictable, violent jumps as we evolved through history so far, we go through it in a planned, and conscious way.
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