Shale energy ‘could kickstart recovery’

By ERIKKA ASKELAND
Published on 11/03/2012 00:00

CHEAP energy provided by gas derived from shale will be a catalyst for the recovery of the Western economy, a Scottish investor has claimed.

But Callum D’Ath, a divisional director for wealth manager Brewin Dolphin and chairman of its Edinburgh investment committee, warns Europe will be at a disadvantage to the US due to its focus on investing in more expensive wind and solar energy instead.

The US has a glut of shale gas which has driven the price to new lows of $2.50 per gallon. But adaptation of coal fired plants to burning shale gas and oil, as well as reconfiguring gas facilities for export to China, is set to rebalance this.

“The environmental lobby in America is not nearly as big, and it has a profound influence on the price of energy. Now there is an oversupply of natural gas,” said D’Ath.

“But the American power plants can switch very easily from coal to natural gas. The price of electricity is halved in a number of places.

“It is a huge boon for the economy where you have such cheap energy, including the manufacturing sector which is having a bit of a renaissance right now.

“The US has a lot of shale gas, Canada has a lot, Mexico has a lot, Argentina has a lot. China has huge reserves of shale gas but it is difficult to access.

“If the world was to get cheaper energy it would make all our lives a lot easier. Wind relies on subsidies in a time of austerity. It is possible because of the environmental lobby being so strong in the UK and Europe – there is a moratorium on fracking right now in France. There is a danger that Europe misses out.”