Auping, de Jong, Pruyt & Kwakkel: The Geopolitical Impact of Shale Gas – The Modelling Approach

ABSTRACT:

The US’ shale gas revolution, a spectacular increase in natural gas extraction from previously unconventional sources, has led to considerable lower gas prices in North America. This study focusses on consequences of the shale gas revolution on state stability of traditional oil and gas exporting countries in the vicinity of the EU. For this purpose, we developed two separate SD models. The first model was used for assessing the impact of shale gas and energy decoupling on oil and gas price developments. We selected some of these price developments as input scenarios for a second SD model. This SD model was used for assessing the impact of energy price scenarios on countries’ economic development, and via the development of unemployment and purchasing power, on state stability. The conclusion of this study was that while shale gas developments may be seen as a part of the standard energy hog-cycle, this may lead to pressure on oil prices, which may cause instability in traditional oil and gas producing countries in the neighbourhood of the EU. Further, the effects of energy decoupling may have an even larger effect on putting energy prices under pressure, thus leading to social unrest.

 

Available for download here.

 

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