Horizontal drilling and hydraulic fracking propelled the United States into a state of energy abundance. These technological advances radically transformed the global energy landscape, granting the US the ability to effectively exploit untapped reserves of oil and natural gas. The unconventional energy revolution triggered a series of positive effects on US economy, foreign policy and energy security.
Economically, the fracking boom reduced the country’s trade deficit, added over $430 billion to annual GDP, while generating approximately three million American jobs that pay double the median US salary. These figures are expected to increase to $590 billion in GDP contribution and 3.8 million jobs by 2030.
The dramatic shift from energy paucity to energy abundance entails geopolitical implications: in particular, an increase in US soft and hard power by granting the US greater freedom in the realm of foreign policy. This freedom has given the US the ability to counter Iran’s destabilizing activities and support for militant proxies through aggressive economic sanctions and a robust reset to deterrence.
In doing so, the United States is able to continually support regional stability, affirm its commitment to regional allies and deter Iran’s malign influence. Conversely, a state of energy scarcity would severely impede the US’s ability to enjoy energy security while checking Iran’s destabilizing behavior, ultimately risking the regional stability at large.
Considering the extent to which these positive effects have benefitted the US, is it possible for other nations – with similar resources – to emulate the unconventional energy revolution on their own terms?
Resource availability does not equal effective exploitation. A favorable industrial environment is an indispensable element of a successful shale revolution. A conglomeration of favorable industrial conditions led to a successful shale boom in the United States—conditions absent to varying degrees in most other countries. These conditions include: technological prowess, favorable geology, an investor-friendly industrial environment, reliable data on national subsurfaces, competitive and fluid markets, robust infrastructure, steady support from three successive presidential administrations, and property rights that permit private subsurface ownership.
Various nations – like Argentina, Algeria, China, Poland and Australia – possess large unconventional energy resources, but lack the foregoing conditions, and are therefore unable to emulate the American model. Comparatively analyzing the impediments to a successful revolution in unconventional energy will help elucidate this dilemma.
In Algeria, a lack of demand for shale gas and unreliable state state-owned oil companies stymied shale progress. Although Russia suffers from a similar demand problem, it also lacks the expertise and technological prowess to exploit Bazhenov shale.
Shale development has failed in Europe, and especially the UK, due to higher environmental standards, higher population density and public opposition. With arguably the greatest potential to develop a successful shale revolution, China still falls short. This failure is attributable to deeper reserves, ubiquitous state-owned oil companies, water scarcity, a lack of mineral rights, unfavorable political and legal conditions and the remote locations of its shale regions.
A plate analogy by Guo Xusheng – chief geologist at China Petroleum & Chemical Corp – can help explain China’s struggle to emulate the American Shale revolution: “US shale reserves are like a plate, in relatively good shape and buried evenly close to the surface … For China’s shale reserves, it’s more like a plate that was smashed on the ground, and then stomped on. We’re trying to identify those scattered reserves and trying our best to get to the bigger ones.”
Although shale gas serves as the most efficient, reliable and affordable bridge to renewables, fracking triggers a series of environmental risks. These include stress-induced earthquakes, greenhouse-gas emissions (i.e. methane), community exposure to harmful substances (i.e. benzene), and groundwater contamination.
To leverage its competitive advantage, the US should focus on policy interventions that improve energy efficiency, while accelerating investments in cleaner energy technologies. Short-term regulatory mitigation is also imperative: regulation should work in concert with innovative technology to minimize the harmful effects of fracking.
Energy is therefore generated in a manner that is both environmentally sustainable and economically feasible. This course of action would place the United States on the fastest – and safest – route to green energy.
Sultan Althari (@Sultanalthari) is a Masters Candidate in Middle Eastern Studies at Harvard University’s Center for Middle Eastern Studies and Student-Affiliate at the Kennedy School's Middle East Initiative.