Whatever happened to the energy crisis?
Just a few short years ago, oil prices were going through the roof and the world looked set to embrace renewable energy. What happened?
The answer is “unconventional” oil and gas, vast quantities of which lie trapped in tiny pores of underground rock. Until recently, these were considered too expensive to tap, but thanks to a combination of politics (energy security), economics (spiraling oil prices) and technology (extraction techniques), the world can now access new oil and gas in abundance.
The good news doesn’t end there. The shale-gas revolution or “shale gale”, as it’s known in America, is providing a much-needed boost to the US economy. Several states, especially those on top of the “Marcellus shale” which stretches from New York state to West Virginia, are enjoying an economic boom on the back of shale gas and the resulting drop in gas prices is bringing down the price of electricity overall.
Boon for “tight oil”
Somewhat paradoxically, the “shale gale” is also proving a boon for “tight oil” in the US, both because gas prices have fallen so low and because gas-extraction techniques can also be applied to oil. Shale gas has already turned America into the world’s biggest gas producer and the International Energy Agency (IEA) predicts the US could overtake Saudi Arabia as the world’s biggest oil producer by 2020.
The US boom is prompting other countries to develop their unconventional oil and gas industries, too. In March, Saudi Arabia announced that it would begin exploratory drilling of shale and other unconventional gas reserves this year.
In its World Energy Outlook 2012, the International Energy Agency (IEA) forecasts that global gas production will grow by more than half by 2035, with unconventional gas accounting for nearly two-thirds of that growth. By then, the IEA expects China will account for the lion’s share of growth, outpacing growth in the entire Middle East and North Africa region.
Mixed blessing for the environment
The implications for the environment are less positive. Natural gas and oil produce fewer emissions than coal but their abundance and accessibility is pulling in investment, and subsidies, at the expense of renewables. In the US, gas is also driving down the cost of electricity, which could potentially undermine efforts towards energy efficiency.
Energy shortages are still a reality in many countries because of a lack of infrastructure and investment. Globally, however, the burning question is no longer whether the world has enough energy, but rather whether it can afford to consume the oil and gas that it has.
The scientific consensus, and the reply of the IEA, is no. They say that, without a greater push towards renewables and energy efficiency in the next three to four years, global temperatures will rise by more than the critical threshold of two degrees Celsius, triggering lifestyle changing effects, such as higher sea levels and more extreme weather events.
The shale gale and tight oil may have saved the world from an energy crunch, but this only perpetuates the link between growth and climate impact. Unless we break this link with renewable energy sources and increased efficiency, the benefits look set to melt away further with each passing summer.