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Economic Analysis of Shale Gas

In: Business and Management

Submitted By bmc137
Words 1290
Pages 6
Economic Analysis of Shale Gas an Industry Alternative

By

Lillian Ashford

&

Bridget M. Chow

Professor Nelson Altamirano, Ph.D.

National University

ECO 607

Economics for Managerial Decision-Making

December 11, 2011

Introduction

Shale gas is natural gas that is trapped in shale formations. Shale particles are fine grained sedimentary rocks that are rich sources of petroleum and natural gas. In the past, it was not economically viable to produce shale gas; however, with technological advances and the forward thinking perceptions of reducing our ecological footprint, the process has become more economical due to horizontal drilling and fracturing. The natural gas industry in the United States has been revitalized as a result of the production of natural gas from shale formations. In 2009, shale gas represented approximately 14% of the United States total natural gas supply. The production of shale gas is expected to increase and make up approximately 60% of the (U.S.) total natural gas supply by 2035.
The question to ponder is whether or not shale gas is a viable energy option for the United States to consider in reducing the energy dependence of the Organization of Petroleum Exporting Countries (OPEC) while increasing fiscal responsibility and economic viability in both the short and long run analysis?

Economic Analysis

The shale gas industry has contributed to the economy in terms of jobs, economic value and revenue for the government. Shale gas production has changed the U.S. energy outlook and the economy. In 2010, shale gas represented 27% of U.S. natural gas production. Within the next five years, shale gas production is expected to grow to 43% and 60% by the year 2035. Shale gas has the potential to support more than 1.6 million jobs and contribute more than $230 billion to the GDP...

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