MADRID – Thousands of negotiators are currently gathered at the United Nations climate-change talks in Warsaw, creating a blueprint for a comprehensive global agreement to be delivered by 2015. But, as the negotiators work, the world’s energy landscape is in enormous flux. Given that most of the world’s CO2 emissions stem from energy production and transport, it is critical to monitor these changes closely.
In particular, the shockwaves triggered by the shale-energy revolution unleashed in the United States are reverberating globally. With the advent of hydraulic fracturing, or “fracking,” US oil production has risen by 30%, and gas production by 25%, in just five years. Shale gas contributed almost nothing to US natural-gas supplies at the start of the century; by last year, its share had soared to 34%, with the US Energy Information Administration predicting a further rise to one-half by 2040. As a result of this bonanza, US domestic energy prices have plummeted.
The US, with all its geographical blessings, is on the road to energy self-sufficiency and is reaping clear economic benefits. Development of unconventional oil and gas supported 2.1 million jobs and contributed $74 billion in tax revenues and royalty payments to government coffers in 2012. Industrial competitiveness has soared, owing to much higher gas prices in Europe and Asia. Refiners and petrochemical companies are flocking to the US.
But this does not mean that the US can withdraw into splendid energy isolation. After all, energy is a global commodity. The effect is direct when it comes to oil prices. Although oil accounts for a smaller part of the energy mix nowadays and spare capacity is currently well ensured, chiefly by Saudi Arabia, a price shock would still have global effects – as such shocks have had in the past.