Articles from 2012
Europe -and the Euro - and shale
- Written by Nick Grealy
- Published: 21 February 2012
Alan Riley and I have shared enough stages at various places around Europe, including Kiev next week, that we generally agree on shale but writing in the WSJ, he has a slightly more pessimistic take than me:
The prospects for shale gas production in the European Union appear to be weakening. Bulgaria has become the second EU state after France to ban hydraulic fracturing to extract it from the ground. The environmental movement across Europe is building its campaign against the technology, spreading alarm wherever energy companies express interest in developing a shale play.
Is this because I trust that people will be open to facts over emotion, or is that as a lawyer he has a less generous, if probably more realistic, view of human nature?
But one thing we agree on:
Shale gas is not like GMOs. It can only be ignored with hugely damaging consequences to European prosperity and energy security. The EU needs to look at redesigning its energy and climate-change policy to focus on rapid cuts in CO2 by switching to gas from coal. Its member states need to allow shale gas development at scale to obtain the low-cost energy that is benefiting the U.S. economy.
Behind the pay wall he discusses the strategic implications of shale, something that he's the specialist on. It's clear now that leaving shale in the hand of energy professionals with vested emotional and financial incentives to downplay it, simply postpones reality and makes future adjustments more difficult.
An example is this follow up by Bloomberg on last week's FT piece by UBS Currency Strategist Mansoor Mohi-uddin.
The dollar will extend its long-term recovery against the euro as the development of shale-gas deposits and an increase in oil production cut U.S. energy imports, according to UBS AG.
“The greenback is also likely to break its negative relationship with oil prices as the U.S. starts to lose its foreign-energy dependence,” Mansoor Mohi-uddin, chief currency strategist at UBS in Singapore, wrote in a research report received today.
“The shift in the U.S. energy outlook suggests the dollar’s long-term recovery against the euro that began in 2008 should continue,” Mohi-uddin wrote.
Boring old shale gas won't change anything say the energy experts.This is a classic example of what Paul Krugman recently described as the Upton Sinclair Theorem:
It is difficult to get a man to understand something, when his salary depends upon his not understanding it.
But now economic and geopolitics are impacted, people might start asking why on earth not. I can't help but point out that this isn't a report by a City of London bank, but the Singapore department of a Swiss one. That's in Asia, where they just don't have brand name expertise that UK and EU policy makers trust. But they do have all the money.