The tectonic plates are shifting is an over-used expression, deployed by fashionistas when skirt lengths change by a few inches, and by politicians when some unknown soars to his 15 minutes of fame. When it comes to the energy industry, however, the expression is apt.
In America, where policymakers have spent decades worrying about over-dependence on oil from unstable or hostile regimes, a new technology--fracking--is producing such an abundant supply of crude oil that refineries are having difficulties processing it all.
The same technology is also adding decades of supplies of natural gas to our available resource base, driving down the price and making it possible for America to become a big exporter of natural gas. Unless, of course, the government accedes to the wishes of DuPont and other large users of natural gas and refuses to allow exports.
The discovery of virtually unlimited supplies of natural gas comes at a convenient time--just when the Obama administration has decided to make the construction of new coal plants virtually impossible, and is to tighten regulation of existing plants to make many uneconomic to operate.
This plentiful, cheap supply of natural gas makes it difficult to justify the construction of costly nuclear plants, especially since the administration refuses to activate the nuclear waste repository in Nevada, the home state of the leader of the Senate's majority Democrats and an opponent of bringing nuclear waste into his state.
A few of these costly plants will be built in America, as some utilities reckon their customers are willing to pay for insurance against a spike in natural gas prices, but most of the 60 reactors under construction worldwide are in countries such as China, Russia and South Korea, where governments can saddle taxpayers and customers with the high cost of nuclear power and of "energy security."
Meanwhile, in Britain, energy shortages loom. Renewables have proved terribly expensive and difficult to get built; coal is to be phased out pursuant to orders from Brussels; and nuclear power is so costly that Centrica pulled out of a nuclear construction deal, and France's EDF refuses to go through with the construction of the planned Hinkley Point facility unless the UK government guarantees that the high and rising costs will be reflected in the prices it is allowed to charge for electricity.
Which leaves natural gas. Since Britain will be bidding against Asian countries for overseas gas supplies, Alistair Buchanan, outgoing head of energy regulator Ofgem, is predicting that imported gas will be extraordinarily expensive, especially if US protectionists persuade the President to ban exports. Worse still, natural gas, which now accounts for 30% of power station fuel, will account for 60%-70% by 2020.
Germany is not in much better shape. Its pursuit of what are probably the greenest policies of any industrialised country, combined with the phasing out of nuclear, has the country headed towards severe energy shortages. Paradoxically, this has driven up reliance on coal--at least for now. For its manufacturing industries to remain competitive, Germany has decided it needs low-cost power and to build some coal-fired plants to replace older ones.
Although renewables remain the power source of choice for greens, they require such massive subsidies that their role in meeting soaring electricity demand will remain incidental. Spain is one country that has decided it can no longer afford the subsidies that renewables require, and only Obama's antipathy to fossil fuels, his war on climate change, and the political clout of some companies keep subsidies flowing to otherwise bust solar and wind companies in the US.
China is doing more than subsidising renewables and building coal and nuclear plants. Its state-owned enterprises (SOEs) are in a position to include in their bids for oil supplies, the value assigned by the regime to security of supply, in addition to the mere commercial value of the resources. The SOEs--among them Cnooc and Sinopec--are estimated to have spent almost $100bn acquiring foreign oil companies in the past few years, and the International Energy Agency estimates that by 2015, China will have doubled the overseas output under its control from levels in 2011.
The Chinese are also acquiring foreign energy technology, either by making access to its markets conditional on the handing over of important technology, or by acquiring it by what we might politely call less overt means.
It is obvious from even this partial list of the changes in the energy markets that we are entering a new energy age. With major geopolitical implications.
* An oil and gas-rich America will care less about ruckuses in the Middle East. Even more important, Jin Zhongxia, head of the research arm of China's central bank, says America's new energy opulence assures that "the dollar's global dominance will continue."
* China is using its lock-up of oil supplies to extend its political influence in Africa. Private-sector companies can't compete with China's SOEs in countries where Beijing can add a new port, an airport, an air traffic control system, to supplement the cash bids from its SOEs. The regime is also becoming more belligerent in offshore areas believed to hold large deposits of oil and gas.
* Europe and the UK, their economies already under strain, are finding that that costly energy is interfering with their export-led growth strategies.
* The energy deck is being reshuffled. Fracking is likely to drive down oil prices in the long run. Coal will remain a major player. Renewables continue to be dependent on subsidies, which cash-strapped countries are putting under review. Nuclear power is a high-cost option, its role dependent on how much governments are willing to extract from customers and taxpayers.
Real tectonic plates move slowly, about at the rate your fingernails grow. The energy economy's plates are moving far faster than that, with profound political adjustments to follow.