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Key determinants of shale gas impact on energy prices

Author

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  • Valentina Ivan

    (Bucharest Academy of Economic Studies)

Abstract

Recent advances in drilling technology have led to profitable extraction of natural gas from shale gas formations. Shale gas has changed the economics of natural gas production in US as the sudden increase in supply has resulted in significantly lower gas prices. Starting 2008, the difference between gas prices in the United States and Europe has widened, with European gas prices even three times higher as compared to US ones. In North America, coal has been replaced by gas in the US electricity generating sector due to the sharp decrease of gas prices. Furthermore, coal reserves were partly exported to the EU, which has led to a decrease in prices in the EU and a replacement of gas by coal in the EU electricity sector. However, the effect cannot be entirely attributed to shale gas revolution, as other factors contributed such as minimum historical prices for carbon emission allowances in recent years and a decreasing consumption due to economic recession. The success of shale gas in the US has prompted companies and governments to assess the possibilities of replicating the shale gas production in Europe.

Suggested Citation

  • Valentina Ivan, 2015. "Key determinants of shale gas impact on energy prices," Romanian Statistical Review Supplement, Romanian Statistical Review, vol. 63(5), pages 84-99, May.
    • Handle: RePEc:rsr:supplm:v:63:y:2015:i:5:p:84-99
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    References listed on IDEAS

    as
    1. Kinnaman, Thomas C., 2011. "The economic impact of shale gas extraction: A review of existing studies," Ecological Economics, Elsevier, vol. 70(7), pages 1243-1249, May.
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    More about this item

    Keywords

    Hydraulic fracturing; shale gas; gas prices; coal prices; electricity prices;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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