In this week's leader on violent protests in the Arab world, The Economist gets it wrong on shale gas again:
With [American] troops mercifully out of Iraq, their efforts to push the Israeli-Palestinian peace process going nowhere, and shale gas reducing their dependence on Arab oil, surely it is time for them to leave the world's least grateful people to make a mess of their lives by themselves?
This is admittedly a rhetorical straw man that the magazine is setting up to tear down in the rest of the piece. I agree with their geopolitical critique of this view - the existence of Israel and Iranian nuclear ambitions, among other reasons, will keep the U.S. involved in the Middle East indefinitely.
But the article fails to expose the fallacy in the other half of the "get us out of there" view: the shale gas boom does not reduce our dependence on foreign oil. Why not?
First, oil is globally traded. America imports very little oil from the Middle East - it is the influence of that region's massive oil exports on the world price that makes us dependent. Even if enough oil were produced in the U.S. (and our stable North American neighbors) to satisfy American demand, prices would still be set by the world market, which would still be driven primarily by Middle East production (or, in a crisis, lack thereof).
Second, and more importantly, gas is not oil. They aren't good substitutes. Natural gas is used to heat homes and in industrial processes, but it's most significant, quickest-growing, and most disruptive use is for electric power generation. Oil, on the other hand, is used for transportation: gasoline, diesel fuel, and kerosene to fuel our cars, trucks, and aircraft. Oil is not a good fuel for electric generation - it is very rarely used (outside of Hawaii). And, at least today, it's not practical to use natural gas to fuel vehicles.
That could change in the future, but for that to happen we need to convert much of the vehicle fleet to use natural gas and build a new network of refueling stations. Or we need to dramatically increase the share of electric vehicles, making the transportation sector fuel-agnostic. The latter seems like the wiser long-term strategy but either will work. Until and unless either shift happens, the U.S. will remain just as dependent on foreign oil as it is today, no matter what happens to natural gas.
To be fair to The Economist, they do mention later in the piece that "the Middle East still sets the price at America's petrol stations" - but readers are still left with the impression that shale gas is changing that. It's not.
The shale gas boom and resulting fall in U.S. gas prices does matter - it is a huge shock to the electric power system. But that's a story about gas replacing coal, not oil. That shift is probably a good thing from an environmental perspective - but it does nothing for energy independence since both are domestic fuels.
The trope that shale gas=energy independence keeps being repeated. It may one day prove true - but it's not at all true now, and getting to a gas-led independence requires big technological and/or infrastructure changes. Even then, the key breakthrough probably won't be shale gas, but batteries. More broadly, if you think addiction to Middle East oil is bad for U.S. foreign policy, the solution isn't shale gas, but using less oil.
