Shale gas revolution shaking up the world

Plentiful gas supplies for the domestic market will allow US manufacturing to be more competitive with products produced in lower-cost centres in Asia, for example.

There is growing speculation of a manufacturing revival in the “rust belt” States of Ohio, Michigan and Indiana.

If this does occur, it will be a longer-term trend as it is no easy challenge to reverse decades of steady decline.

The US has long had a heavy reliance on imported oil and gas.

A more immediate impact will be a transformation of the US energy market from a deficit to a surplus – meaning a reduction of energy imports into the US.

A United States that is self-sufficient in energy production has the potential to affect the globe’s geo-strategic balance, particularly with regard to the Middle East and Europe.

There is serious speculation that the US will become a significant net exporter of natural gas.

President Obama said recently that shale gas would enable the US to "develop a hundred-year supply of natural gas that's right beneath our feet. Cut our oil imports in half by 2020 and support more than 600,000 new jobs in natural gas alone."

This could make the US competitive with other gas producing nations and may, for example, undermine Russia’s virtual monopoly in supplying gas to Europe.

Russia has been exporting gas at a price equivalent to $10 per thousand cubic feet, significantly higher than the wholesale price in the US which has dipped below $3 at times in recent months.

Nervous executives at Russian gas company Gazprom are reportedly putting plans on hold for gas field exploration in sub-arctic zones, which would not be profitable should prices fall on the back of shale gas flooding the world market.

Fracking is currently banned in France, but there is interest in shale gas development from other European countries.