Shale Gas Could Impact Future U.S. Energy
January 4, 2012

Shale Gas Could Impact Future U.S. Energy

According to a new report, shale gas could impact the U.S. energy policy and lead to future technological development.

MIT researchers found that gas prices would rise by about five times the current levels by 2050 without shale gas, but it would only double with it.

According to the report, shale gas also reduces electricity price growth by 5 percent in 2030 and 10 percent in 2045, compared to a scenario without shale gas.

“Prior to this we hadn´t compared U.S. gas production with and without shale,” Henry Jacoby, co-director emeritus of MIT´s Joint Program on the Science and Policy of Global Change, said in a press release. “This report makes that comparison. And we found much of what we already knew – which is a good thing – that shale makes a big difference. It helps lower gas prices, it stimulates the economy and it provides greater flexibility to ease the cutting of emissions. But it also suppresses renewables.”

Under one scenario, the researchers impose a renewable-fuel mandate.  They found that with shale, renewable use never goes beyond the 25 percent minimum standard they set.  However, once shale is removed from the market, renewables gain more ground.

One concern environmentalists have with shale gas extraction is that fluids from the gas production could seep into and contaminate groundwater supplies.  However, the authors found these concerns to be "overstated."

Jacoby said the development of the shale gas industry in the U.S. is important because prices are cheaper than in other gas markets.

While the U.S. pays less than $4 per thousands of cubic feet, other markets pay up to $16.  The researchers said there is also potential for the U.S. to become exporters.

“In the near term, our supplies are cheap enough that we should have the ability to export,” Jacoby said in a press release. “But over time, we likely won´t be able to compete with places like Russia and the Middle East that have lower costs, and eventually we´ll again turn to importing gas.”

The authors published their paper in the journal Economics of Energy and Environmental Policy.


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