The New Geopolitics of Natural Gas

In the past decade, the development of hydraulic fracturing (or fracking) in a competitive energy market has produced an abundance of relatively cheap natural gas in the United States. Liquefied natural gas (LNG) can be shipped to any country with a terminal capable of receiving it. As Grigas’ book ably explains, fracking has had economic and environmental effects that will become more profound over time. So, too, will the geopolitical consequences, as the increasing supply of LNG puts pressure on Qatar, Russia, and other gas exporters and makes it less costly for countries such as China and India to reduce their dependence on coal to meet their growing needs for electricity. A truly global market in LNG is emerging and rearranging an energy economy built on long-term bilateral contracts. In particular, lng will reduce the heavy dependence of many European countries on Russia’s monopolistic Gazprom for gas supplies.