It’s Too Soon to Judge Shale Gas

Shale gas—that is, natural gas from shale deposits—may seem at first glance a huge, indisputable success for the United States. In 2007 it accounted for just 8 percent of the gas extracted; by 2013 its share had risen to nearly 40 percent. As a result, in 2009 the United States became the world’s largest producer of this, the cleanest of all fossil fuels. This surge has led to two far-reaching decouplings of price: between those of natural gas and crude oil, and between those of natural gas in North America and in Eurasia.

Before 2008, the energy-weighted price of crude oil in the United States used to fluctuate at between one and two times that of natural gas. By 2013, that ratio had risen nearly to 5. In 2008, wholesale gas prices in the United States were just marginally lower than in Europe and only about 20 percent lower than in Japan. But by 2013 Europeans were paying nearly three times as much as Americans, and the Japanese nearly 4.5 times.

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Image credit: LNG terminal Ishikari Bay, Japan. Wikimedia Commons

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