The Governor of New York just banned hydraulic fracturing for extracting shale gas. Here’s my very brief reaction from the NYT editorial. I don’t think any of this should be based on the idea that this was done based on ‘only’ scientific information – or even partially. The wider issues are:
- Headlines: Shale gas is no longer the story, shale oil is.
- Economics: The US is flushed with ‘fracked’ oil and gas. Impacting global prices and geopolitics.
- Economics: The fall in oil and gas prices pumps up the US economy and punishes non-democratic states (um, excluding Norway). This has a profound impact – see the Russian Ruble (or is it rubble?) and even the cancellation of South Stream gas pipeline and possible cancellation/delay of expansion of Hungary’s Paks nuclear power plan
- Political: Banning extraction of shale gas at this point – with low oil and gas prices, probably doesn’t do much for the US industry as a whole since investments are being cut. I’m sure there are some figures, but lots of gas now comes from shale oil fields – as secondary extraction.
- Political: NYC drinking water comes from much of the region proposed for hydraulic fracturing.
- Social: Society gets clean water, they have cheap energy (see above) so all is well for the time being.
So in the end, by banning shale gas extraction, at a time with low or no investment in this sector, due to low domestic and global prices, combined with strong social opposition – that would take years to resolve in courts, I don’t see the downsides to the industry, markets or people. A win-win for all. Well, at least at this point. The impact of shale gas and oil extraction on the US and global economy is significant enough to propel a domestic and international energy agenda forward. So I don’t think we have seen the end or the beginning of the end to shale gas and oil.