October 22, 2012 Shale Revolution Shakes the World By Robert A.

Manning A senior fellow at the Atlantic Council, Manning questions U.S. energy policy an d its impact on the economy. For all the attention o see its longer-term raising energy policy enabling US economic sts. the Shale Revolution has garnered, we are only beginning t impact and not only in reshaping the energy landscape and questions. The Shale Revolution is also an emerging factor revitalization and impacting long-term geopolitical intere

Shale gas is dramatically altering the US energy mix. According the US Energy In formation Agency (EIA), natural gas now rivals coal for electricity production ( coal, 34%, gas, 32% in May), with the added benefit of helping to reduce GHG emi ssions (1.7% in 2011). Yet at the same time, lower prices of gas is also changi ng the economics of wind, solar and further dampening that of nuclear. Indeed, the Shale Revolution raises a number of questions about US energy polici es, starting with those surrounding the lack of more uniform regulatory policies to ensure safety: In light of the rise of natural gas realities, does it make more sense to rethink subsidies to wind and solar and instead give more priority to building a nation wide smart grid network (which would ultimately benefit solar and wind)? Is gas substantial and long-term enough to warrant serious efforts to actively co nsider converting transport from gasoline to natural gas for fleets, if not for private vehicles? Will the move from coal to gas for electricity spur efforts to develop carbon seq uestration technology so that it becomes cost-competitive, enabling clean coal t o compete with gas and renewable as a source of electricity? With the US now the world s largest gas producer, whether and to what extent ow gas exports? Certainly, stranded gas in Alaska, for example would find ready markets in Japan and elsewhere in East Asia. Then there is the broader impact on the US economy. In addition to enabling the US to reducing dependence on oil imports from 60% to 42%, unconventional gas (sh ale, tight sands and coalbed methane) is supporting one million jobs projected to grow to 1.4 million jobs by 2015, according to an IHS study. Shale is spurring US manufacturing in downstream industries petrochemical, chemical, metals and ot her energy-intensive industries. A Price WaterhouseCooper (PWC) study projects t hat the benefits from shale could allow US industry to lower raw materials and e nergy costs by $11.6 billion and create approximately one million more jobs by 2 025. Lastly, there are the geopolitical ramifications of the Shale revolution with Ru ssia and Iran the apparent losers. With shale allowing US gas to sell at 75% bel ow what Gazprom charges E.European customers, the most important cog in Putin s St ate capitalist crony system may be at risk. Gazprom has been forced to lower pri ces to Europe and is being investigated by the European Commission for price fix ing. The result will likely increase pressure on Gazprom to lower prices. Alread y Gazprom s market value has shriveled from $365 billion in 2008 to $120 billion t oday and major projects such as the Shtokman gas project in the Arctic have been to all

cancelled. As Gazprom has been a veritable cash cow enabling Putin to build and sustain his ruling network of cronies, Gazprom s uncertain fate raises intriguing questions about Russia s future as a petro-state. [3] Robert A. Manning is a Senior Fellow at the Atlantic Council. http://www.ideaslaboratory.com/2012/10/22/robert-manning-shale-revolution-shakes -the-world/?utm_source=outbrain&utm_medium=relatedcontent&utm_campaign=ilo