The Shale Dilemma: A Global Perspective on Fracking and Shale Development.

• Author: Chevalier, Jean-Marie
• Position: Book review

The Shale Dilemma: A Global Perspective on Fracking and Shale Development edited by Shanti Gamper-Rabindran. (University of Pittsburgh Press, 2018). 416 pages, Hardcover, ISBN-10: 0822945134, ISBN-13: 978-0822945130.

This book provides a set of comprehensive explanations and answers to questions that are in the mind of most people dealing with energy matters today. Shale gas production--is it really an energy revolution or does it announce an environmental catastrophe? For a country that possesses shale gas resources, is it worthwhile to develop such resources or is it better, for a great number of economic and environmental reasons to leave it in the ground?

The general literature tends to frame shale as bringing economic benefits but potentially bringing also environmental costs. The Shale Dilemma delves into this question more closely and argues that whether shale production brings net economic benefits and whether it spurs economic development that benefit society broadly are not foregone conclusions, when appropriate policies are not in place to achieve these goals.

As documented in the US chapter, shale brings enormous economic benefits, but it also brings economic costs. The shale industry faces a boom-bust cycle and when this boom-bust is not well managed, local economies risk experiencing a long-run reduction in economic productivity. A number of local governments, having borrowed heavily during the boom period, face heavy debt in the bust period that they find difficult to service at a time of reduced tax base. The US chapter also indicates the economics of shale raises distributional issues. Shale provided enormous benefits: energy resources, government revenue from taxes, jobs, to name a few. Owners of mineral rights gain royalty income and consumers enjoy cheaper gas. (US production is a large enough share of the segmented North American market to depress gas prices for consumers; the same would not likely be the case in Europe). On the contrary, owners of the surface and neighbors of shale operations experience negative spillovers from shale production without receiving the benefits of royalty incomes.

The world faces the urgent challenge of addressing climate change. Hence, how shale development would affect the climate is a key question for readers. Shale gas has been seen as more climate friendly than coal, as it emits less carbon dioxide than coal per energy unit. However, as noted in the US chapter, methane leakage from...