AMERICA’S “unconventional” gas boom continues to amaze. Between 2005 and 2010 the country’s shale-gas industry, which produces natural gas from shale rock by bombarding it with water and chemicals—a technique known as hydraulic fracturing, or “fracking”—grew by 45% a year. As a proportion of America’s overall gas production shale gas has increased from 4% in 2005 to 24% today. America produces more gas than it knows what to do with. Its storage facilities are rapidly filling, and its gas price (prices for gas, unlike oil, are set regionally) has collapsed. Last month it dipped below $2 per million British thermal units (mBtu): less than a sixth of the pre-boom price and too low for producers to break even.
Those are problems most European and Asian countries, which respectively pay roughly four and six times more for their gas, would relish. America’s gas boom confers a huge economic advantage. It has created hundreds of thousands of jobs, directly and indirectly. And it has rejuvenated several industries, including petrochemicals, where ethane produced from natural gas is a feedstock.
The gas price is likely to rise in the next few years, because of increasing demand. Peter Voser, the boss of Royal Dutch Shell, an oil firm with big shale-gas investments, expects it to double by 2015. Yet it will remain below European and Asian prices, so the industry should still grow. America is estimated to have enough gas to sustain its current production rate for over a century.