Friday, 6 January 2012

Amidst the doom and gloom: An economic miracle in the making - but not yet in Europe

While the mainstream media in the US, and particularly in Europe, continue to focus on the doom and gloom of the financial crisis, there is an economic miracle in the making, which to a great degree goes unreported. In a must-reed article Peter C. Glover explains why, particularly in Europe, the failed "green" energy policies are seriously delaying, or even preventing a positive turnaround:

Amidst the doom and gloom headlines presaging dire prognostications for the Western economies in 2012 there is the very real promise of a global economy re-directing miracle in the making. The impact and promise of shale gas and shale oil is probably the good news story as we step into 2012. Not that you would know it, given the media’s predilection for bad news.

Only two obstacles stand in the way. First, bad energy policies that do not prioritise cheaper fossil fuels – dumping countless millions out of jobs and into fuel poverty. Second, environmentalist campaigners implacably opposed to any hydrocarbon-fuelled energy development. It threatens their Disney-esque utopian blueprint.

But before we glimpse a rare ray of sunshine amidst the stretching economic gloom, we must first demolish a key widely held myth that is fuelling bad energy policy-making: that oil and gas prices will only go on rising, ultimately rendering their cost comparable to expensive and feeble renewable energy generation. As economist and professor of energy policy Dieter Helm’s recent excellent article pointed out, the UK’s current bias towards expensive renewables is a direct result of energy secretary Chris Huhne’s unwavering faith that the price of fossil fuels can only go on rising.

That’s precisely the mistake an incoming Conservative Government made in 1979. Then oil prices peaked at $39 a barrel (the equivalent of $150 today). In the mid-1980s, however, the bottom dropped out of the oil price ‘barrel’ taking over 25 years to recover. As Helm points out, it is the peak oil and gas brigade – today, a useful ally to the green lobbies – who assume depleting resources based on then known reserves. As Helm says: “Nonsense – and some of it dangerous nonsense”.

Helm rightly asserts, “The Earth’s crust is riddled with fossil fuels” adding “there is enough oil and gas (and coal too) to fry the planet several times over.” And his words echo Huber and Mills’ definitive quote on the subject, “Energy supplies – for all practical purposes – are infinite”. The issue is not (and never has been) too much or too little of a given resource. It has always been whether prices are too low or too high to make extraction viable. Today, the shale gas and oil “miracle” – or rather man’s ingenuity in finding new ways to tap previously unrecoverable resources – has yet again blown a gaping hole in the peak-ist argument; as the end of year figures make only too plain.
Equally, the new EU Energy Roadmap 2050 shows the EU is tenaciously holding onto its green dream in the vain hope that rising oil and gas prices will eventually make renewables commercially viable. But the shale gale is blowing an even greater hole in that hope.

While new processes allow vast new energy resources to permeate the world’s shales, the ‘biblical’ scale of the potential economic turnaround still has a way to go to permeate the mindset of policy-makers. Even so, the shale-fuelled miracle, able to part the sea of gloomy economic forecasts and reveal a path to a much happier 2012, is very real – despite the plague of bureaucrats.

Read the entire article here


In the United States the shale gas/oil revolution has through its own force aleady changed the country´s economic outlook. This development is taking place, not because of some positive action of the present US administration, but despite of its policies. Ironically, it is quite possible that the energy centered economic turnaround, in which Obama has had no role, will in the end help to get him re-elected.

In Europe the outlook is much gloomier. We have to wait for new elections in order to replace the present failed leaders - and hope that the Poles will not allow the dark forces (Russia/Gazprom and greenies) to prevent their way to prosperity.

No comments: