I’m on the board of the housing cooperative (for those of you outside NYC, it’s a condo-like housing system where you own shares in a corporation rather than an actual apartment), and we do something unusual every month when our fuel bill comes in.We gloat.Our buildings are heated by natural gas, and the crash in gas prices due to the huge supply increases from the shale boom means that one of our biggest coop expenses has been falling for quite a while.But nothing like that looks to happen in Europe for some time. The energy revolution over there is on hold.In America, the shale gas revolution is already well underway. As a result, supplies are abundant, prices are at 10-year lows, and tens of thousands of well-paid jobs are popping up. Europe’s gas reserves are estimated to be formidable—639 trillion cubic feet by some measures, almost as good as the U.S. figure of 862 trillion cubic feet. The exploitation of this resource would not only help the continent strategically by reducing its dependence on Russia; it could also contribute handsomely to several countries’ bottom lines at a time when runaway budget deficits and austerity are increasingly becoming the norm.But in Europe, people are still arguing over whether the revolution should go forward. The Financial Times outlines the various cases against it:
Environmental opposition to fracking, which involves injecting huge volumes of water, sand and chemicals deep underground to blast open the shale rock and release the gas trapped inside, is stronger in Europe than in the US. Fears that it could contaminate groundwater prompted France and Bulgaria to ban the practice. Romania and the Czech Republic could follow suit.There are also widespread concerns that the process of exploiting shale releases large amounts of methane, a powerful greenhouse gas. Environmentalists also fret about the small earthquakes that shook parts of Lancashire in the UK last year in the vicinity of a shale gas drilling site. Oil companies insist fracking is safe when performed properly.Another big obstacle is property rights. In the US, private individuals own the minerals underneath their land: in Europe, they are generally owned by the state. Persuading governments to let oilmen exploit their resources can be hard: US companies say it takes them a year to permit a well in Poland, compared with a few months in the US.Beyond that, there is the argument that Europe is just too densely populated for intensive shale gas production. Unlike in the US, where shale plays tend to be far from human habitation, Europe’s can often be close to built-up areas.
There are advantages and disadvantages both to America’s eagerness to exploit new resources and to Europe’s caution. But the result will likely be that America moves forward into a promising new energy future while Europe plays catch-up. The economic gap between U.S. incomes and European incomes is likely to keep growing.America often moves faster than most of the world to embrace new technologies. Sometimes that gets us in trouble; there are risks as well as rewards for early adapters. But more often, it pays off. Being nimble is an important advantage; let’s hope we keep it up.