Fracking Doesn't Threaten Russian Power
Europe probably can't count on a shale revolution to enhance its bargaining power with Russia's Gazprom.
It is an uncomfortable fact for European politicians professing resistance to Russia's geopolitical assertiveness that their energy dependence on Russia is growing. In 2013, the Russian state-controlled natural-gas monopoly, Gazprom, increased its market share in Europe and Turkey to 30 percent, the company proudly announced. This share is bigger than the 2011 historic maximum of 27 percent. Gazprom's exports to Germany increased by 21 percent, to Italy by 68 percent and to the U.K. by 54 percent in 2013.
While hydraulic fracturing -- or fracking -- of shale formations is helping the U.S. achieve energy independence, giving it a freer hand in Middle Eastern policy, the expected effects of the shale revolution for Europe haven't materialized. Liquefied natural gas from the Persian Gulf could have been diverted from the U.S., where demand has shrunk, to Europe. But in 2013, LNG supplies to Europe actually dropped: They mostly went to Asian markets where exporters could command higher prices. If the U.S. manages to export LNG in significant quantities, its price will be roughly the same as what Gazprom charges, a little less than $11 per million British thermal units, not counting delivery costs from ports to the heart of the continent, according to the International Energy Agency. MORE