Putin´s Russia will soon lose its position as Europe´s "energy overlord", thanks to shale oil. This will lead to a decisive strategic weakening of Russia´s influence in Europe and contribute to the removal of another tyrant - Vladimir Putin.
Last month's stock-swap deal between BP and Russia's Rosneft might, a few years ago, have caused strategic jitters in Washington. Never mind. The Putin regime remains as odious as ever, but the balance of power already is perceptibly shifting away from the world's petrocrats to consumers, thanks to shale gas.
The shale gas revolution has been a surprise, in a sector where surprises are still permitted.
The organized interests whose world is being knocked for a loop by shale gas surely aren't happy about it. The quality on display here is freedom to innovate, also known as freedom to disrupt the rich and powerful who would prefer not to be disrupted. In the U.S., landowners enjoy mineral rights and are free to sell or lease those rights to drilling companies, whatever the neighbors might say. It wasn't the Exxons and BPs but smaller companies that figured out how to make shale gas pay.
Under U.S. labor law, these companies were free to take a chance on new workers without making a lifetime commitment. Also important, back in the 1970s and '80s, a series of deregulatory moves eliminated price and usage controls on natural gas, without which the business would never have been interesting to innovators and entrepreneurs. One company, Mitchell Energy, worked out how "slickwater" fracturing combined with horizontal drilling could free gas from dense shale rock previously uneconomical to develop. The firm's founder, George Mitchell, last year received the Gas Technology Institute's lifetime achievement award.
The U.S. shale boom has ignited a search elsewhere, from China to Central Europe. Poland alone is estimated to hold shale gas reserves equal to half of Europe's existing conventional reserves—a fact already altering the strategic balance between Europe and its soon-to-be-former energy overlord, Russia.
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