Will The Shale Revolution Go Global?

By now, you've likely heard of the whopping energy bonanza known as the Shale Revolution. Thanks to hydraulic fracturing (aka fracking), the US is awash with cheap natural gas, giving energy firms a new source of revenue and businesses nationwide cheaper energy costs. Pretty much the entire world agrees we've hit the jackpot. So you'd think other nations would be keen to jump on the bandwagon. Yet the revolution hasn't much caught on globally—there's plenty of talk, but precious little action despite the obvious benefits. What's the holdup? In a word, governments. In the US, businesses and private citizens drive shale gas development. Sure, the government gets to yay or nay the broader practice of fracking, but because landowners have full rights to all resources underground, governments don't negotiate the contracts. Instead, businesses approach landowners sitting atop shale reserves, and landowners weigh the costs and benefits and decide whether to lease the rights. Individuals, not governments, get to determine whether cheaper energy, job gains and royalties are worth the potential environmental costs. Profit motive is the driving force, and that fosters progress. But this isn't the case elsewhere. In the rest of the world, landowners typically don't own mineral rights—the state does. Landowners—regular folks—don't get to make the decision on whether or not to develop reserves on their property. They don't get to bargain with energy firms, offer a lease and receive royalty payments. That's the government's privilege. As a result, international shale fracking efforts face a massive headwind of bureaucracy and political morass...more