The US shale oil and gas revolution, which in time will spread worldwide, might easily not have happened. Government support for research in the 1980s, experiments by stubborn entrepreneurs in the 1990s, and high gas prices in the 2000s were the key ingredients of shale's overnight success. The outcome is that US gas prices, coal use, oil imports and carbon dioxide emissions have plunged; domestic oil output has soared; and energy-intensive manufacturing industry is reviving.
Imagine the counterfactual – a world where shale production had not occurred. Then today the US president might be having a conversation rather like this …
The president Mitt Romney welcomes his energy secretary into the Oval Office. Both look worried and tired.
“Now I know how Jimmy Carter felt,” Mr Romney says. “Until we fix this energy crisis, we can forget about restoring our economy or America’s place in the world. President Obama lost the last election because gasoline was 5 bucks a gallon and natural gas was 20 dollars a thousand cubic feet.”
"We are doing everything we can, Mr President," says the energy secretary. "But you know, new energy projects take time. We just permitted another big coal plant in Wyoming. Our 'back to coal' strategy is keeping electricity prices down. By 2020, the new nuclear plants may be ready. And since we finished the Keystone pipeline, we at least have secure oil from Canada."
“My next Democratic challenger will use those against me,” says the president. “You know, to the swing voter, our environmental record is a disaster. Even if they don’t care that our greenhouse gas emissions are through the roof, they do care about the smog. How are the wind and solar programmes doing?”
"Doing great, Mr President. Renewable energy is now 8 per cent of our total electricity. But the solar panel makers and rare earth miners in China know how dependent we are on them, and that is keeping prices high. Our manufacturers and chemical corporations keep shutting plants – it is just too expensive to operate in the US."
“Any chance that we can get more liquefied natural gas? We have enough import terminals.”
“We requested more, but Emir Hamad says that, while he is ready to bail out another bank, Qatar has to consider the long-term future of its resources in a world short of gas.”
Mr Romney shakes his head wearily.
“You don’t realise how much this is hurting us internationally,” he says. “We really want to put pressure on Iran over the nuclear issue but we can’t hit them with oil sanctions – the Chinese have made it clear they will have to buy from Iran whatever. Now I have the Europeans on the phone asking us to recognise Russia’s takeover of eastern Ukraine, in return for president Putin guaranteeing their natural gas supplies. The Europeans and the Japanese are hurting even more than we are.”
"Opec is meeting tomorrow, Mr President. We can ask them to increase quotas."
“At least the last administration cut a deal with Colonel Qaddafi to stop the Nato campaign in return for stable oil supplies. But the rest of Opec knows there is no need to increase production, even if they had the capacity for it. At $150 per barrel, they can make all the money they want. The Venezuelans need it for their socialist revolution. We will have to ask the Saudis for a favour again.”
“There is one other possibility, Mr President. The department of energy is saying there might be billions of barrels of oil and trillions of cubic feet of gas in shales across the US. The first experiments are promising.”
Mr Romney frowns. “Experiments? If we had started those 20 years ago, they might be some use … Now get me King Abdullah on the phone.”
Robin Mills is head of consulting at Manaar Energy and author of The Myth of the Oil Crisis
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