For decades, America has dreamed about becoming self-sufficient in terms of energy, and ending its dependence on unsavoury Arab regimes. Now this dream seems within reach. The International Energy Agency this week forecast that America is undergoing a fuel revolution, and that it will overtake Saudi Arabia to become the world’s biggest oil producer by the end of this decade. By 2035, America should be able to meet almost all of its own energy needs. Energy prices are already plummeting, and global manufacturers have started to pull out of Europe and relocate to the southern states to cut bills. An economic miracle is under way.
The reason for the miracle is hydraulic fracturing, or fracking. American energy companies have mastered new ways of releasing oil and gas trapped in shale rocks by firing high-pressure jets of water at them. Just five years ago, this was an emerging technology. Now, shale provides America with a third of its gas. Presidents from Jimmy Carter to George W. Bush have fantasised about drawing ‘renewable’ energy from wind, sea, crops — even wood chips. In the end, the answer has come from fossil fuels. Environmentalists may howl, but let’s remember gas is greener: it emits half as much carbon dioxide as coal. The shale revolution means that America is now leading the world in cutting its carbon footprint, with its emissions down 5 per cent so far this year.
It is hard to overstate the implications of this energy shift, not just to the American economy but to the world order. In the Persian Gulf, the peace is maintained by the US Navy, which spends some $80 billion a year patrolling the sea lanes. Will it still do so when America no longer needs Arab oil? Vladimir Putin has built his Russia around an oligarch-friendly system where the Kremlin will turn a blind eye to corruption as long as the petrodollars flood in from the Caspian Sea. If this money supply chokes up, the Kremlin may be forced to find ways of creating conditions for stable business growth, like those in Eastern Europe.
If fracking technology makes China self-sufficient in energy, then Beijing will be less reliant on regimes like Iran. The Ayatollahs are suffering enough from an extremely effective Western boycott: selling gas to the Indians and Chinese is their lifeline. Saudi Arabia is built on an alliance between a monarchy and hardline Wahhabi fanatics who used the oil wealth to export their poisonous brand of Salafi Islam from the Balkans to Afghanistan. If global demand for Arab and Iranian oil collapses, so too might some of the world’s most despicable regimes. Their power depended on chronic energy shortages. Now, analysts are talking about a new age of energy abundance.
While this is heartening news for most of us, it will be greeted with extreme scepticism by the environmental lobby. After a decade of lobbying, they have now finally signed the British government up to a strategy predicated on energy shortages. Millions are being spent on subsidising wind farms, biofuels and all manner of other unlikely schemes, though these ‘green’ schemes have barely dented our carbon consumption.
The good news for eco-worriers is that the fracking revolution could happen in Britain too. We are rich in shale reserves, with enough in Lancashire alone to power Britain for 65 years. Yet there is a strange and sinister alliance of Big Oil, Big Green and Big Government at work against it, and this group has the Prime Minister’s ear.
The discovery of shale in Lancashire may yet be as significant as the discovery of oil in the North Sea, but David Cameron has been sold a vision of Britain’s energy future that turns out to be illusory. Instead of sticking to this idea, he should look to America. In backing shale, Barack Obama has provided new jobs in many places where they are very much needed. Abundant cheap energy has persuaded Shell to open a new ethane plant in the once-rusting ‘steel valley’ of Pittsburgh; Dow Chemical is pulling out of the UK and the Netherlands to open a propane venture in Texas. An America that spent the last decade fretting about ‘off-shoring’ is now talking about ‘re-shoring’ and a manufacturing ‘homecoming’. The prospects for the shale-rich north of England could be just as bright.
It is understandable that Mr Cameron should have been a convert to the green agenda seven years ago. Then, official forecasts envisaged grim prospects for fossil fuel supply, and renewable energy did seem to be a plausible alternative. But the global energy picture is changing rapidly, radically and irrevocably. To ignore the implications of the fracking revolution — and what it might mean to the north of England — would be almost criminally negligent. Mr Cameron is struggling to find ways of growing and rebalancing the economy. A solution is now staring him in the face.