Enormous potential: The areas marked in red show locations where it would be possible to extract shale gas
Unnoticed by the powerhouses of the British media, the economy of the United States is rebounding on the back of a manufacturing-led boom fuelled by cheap gas. The American revival is in its early stages, but already manufacturing is being repatriated from China: an astonishing development after decades of offshoring.
The factor that above all separates the US energy market from those in Europe and Asia is the enormous increase in gas production and reserves brought about by the shale gas revolution. Which prompts the question: why are British politicians and industrialists not interested in promoting shale potential at home?
In recent years the gulf between open market gas prices in North America and the rest of the world has widened dramatically. The reason — as is now generally understood — was the development in the US of massive gas reserves trapped in previously inaccessible shale rock formations. The benchmark price at Henry Hub in Texas fell from a pre-shale peak of nearly $13 per million British thermal units (BTU) in mid-2008 to as low as $2.71 in January this year. Since January 2011 the US price has averaged less than $4 while the British National Balancing Point (NBP) price has averaged more than $9.
Open market gas prices on either side of the Atlantic roughly tracked each other for 13 years from mid-1995 until mid-2008, when they abruptly separated.
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