The World Energy Outlook (IEA, 2015), which I read for a previous post, briefly discussed the possible effects of the sustained lower oil prices since 2014. Whilst looking further into that issue, I came across this article from the Harvard Business Review (2016). As well as oil, it also touches upon the effect of unconventional and disruptive sources of non-renewables, such as shale gas.
Shale gas is argued to be affecting the current oil price (Makan, 2013*; Elliott, 2015), and will continue to do so in the future (PwC, 2013). As gas is the only non-renewable energy resource that is expected to see increased usage, lower prices and ample reserves may have significant implications for emissions reductions (IEA, 2015: 21). This is especially true for the US, which is a major player in the shale gas business (Haug, 2012). Hartmann and Sam also note that shale gas producers can act as 'quasi swing producers' (2016), which points to the power of policy in potentially shaping market prices of the future.
More robust oil-producing nations (see Figure 1) are now beginning to diversify their energy mix, with moves towards shale gas (which has a lower carbon intensity than coal and oil) and renewables. These investments present significant new opportunities, as cash-rich economies such as Saudi Arabia could help drive innovation, lower costs and share technology for the renewable industry. The most robust economies all also happen to be in areas that experience intense solar radiation (that could mean big things for solar...).
Haug (2012) states that shale gas and renewables are complementary advances, with both helping towards the emissions reductions that are necessary to combat climate change. Without the cripplingly high oil prices and rapidly-depleting reserves that had long been predicted, it is vital that emissions reductions are still kept on the agenda and as a priority. In a future post, I'd like to see if shale gas does have a positive part to play in the energy mix of the future; or whether it's just a route to complacency and broken emissions promises.
*To read this article without a subscription, search "US shale gas to lead to lower oil prices FT" on Google.
Shale gas is argued to be affecting the current oil price (Makan, 2013*; Elliott, 2015), and will continue to do so in the future (PwC, 2013). As gas is the only non-renewable energy resource that is expected to see increased usage, lower prices and ample reserves may have significant implications for emissions reductions (IEA, 2015: 21). This is especially true for the US, which is a major player in the shale gas business (Haug, 2012). Hartmann and Sam also note that shale gas producers can act as 'quasi swing producers' (2016), which points to the power of policy in potentially shaping market prices of the future.
More robust oil-producing nations (see Figure 1) are now beginning to diversify their energy mix, with moves towards shale gas (which has a lower carbon intensity than coal and oil) and renewables. These investments present significant new opportunities, as cash-rich economies such as Saudi Arabia could help drive innovation, lower costs and share technology for the renewable industry. The most robust economies all also happen to be in areas that experience intense solar radiation (that could mean big things for solar...).
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| Fig 1 Low oil prices create high risks |
Haug (2012) states that shale gas and renewables are complementary advances, with both helping towards the emissions reductions that are necessary to combat climate change. Without the cripplingly high oil prices and rapidly-depleting reserves that had long been predicted, it is vital that emissions reductions are still kept on the agenda and as a priority. In a future post, I'd like to see if shale gas does have a positive part to play in the energy mix of the future; or whether it's just a route to complacency and broken emissions promises.
*To read this article without a subscription, search "US shale gas to lead to lower oil prices FT" on Google.
Hi Baljeet, your right that ensuring energy security for the future is key. Diversity of sources, i think is the most important approach to achieve resilience
ReplyDeleteHeres a report i came across on the potential for shale gas to contribute to Europes Energy security http://www.europarl.europa.eu/RegData/etudes/BRIE/2014/542167/EPRS_BRI(2014)542167_REV1_EN.pdf.
Hey Rhona, thanks for that link. Will definitely look into it for the future post!
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