TY - JOUR
T1 - The geopolitical impact of the shale revolution
T2 - Exploring consequences on energy prices and rentier states
AU - Auping, Willem L.
AU - Pruyt, Erik
AU - de Jong, Sijbren
AU - Kwakkel, Jan H.
N1 - Accepted author manuscript
PY - 2016
Y1 - 2016
N2 - While the shale revolution was largely a US’ affair, it affects the global energy system. In this paper, we look at the effects of this spectacular increase in natural gas, and oil, extraction capacity can have on the mix of primary energy sources, on energy prices, and through that on internal political stability of rentier states. We use two exploratory simulation models to investigate the consequences of the combination of both complexity and uncertainty in relation to the global energy system and state stability. Our simulations show that shale developments could be seen as part of a long term hog-cycle, with a short term drop in oil prices if unconventional supply substitutes demand for oil. These lower oil prices may lead to instability in rentier states neighbouring the EU, especially when dependence on oil and gas income is high, youth bulges are present, or buffers like sovereign wealth funds are too limited to bridge the negative economic effects of temporary low oil prices.
AB - While the shale revolution was largely a US’ affair, it affects the global energy system. In this paper, we look at the effects of this spectacular increase in natural gas, and oil, extraction capacity can have on the mix of primary energy sources, on energy prices, and through that on internal political stability of rentier states. We use two exploratory simulation models to investigate the consequences of the combination of both complexity and uncertainty in relation to the global energy system and state stability. Our simulations show that shale developments could be seen as part of a long term hog-cycle, with a short term drop in oil prices if unconventional supply substitutes demand for oil. These lower oil prices may lead to instability in rentier states neighbouring the EU, especially when dependence on oil and gas income is high, youth bulges are present, or buffers like sovereign wealth funds are too limited to bridge the negative economic effects of temporary low oil prices.
KW - Energy mix
KW - Energy prices
KW - Exploratory modelling
KW - Shale revolution
KW - State stability
KW - System Dynamics
UR - http://www.scopus.com/inward/record.url?scp=84986880428&partnerID=8YFLogxK
UR - http://resolver.tudelft.nl/uuid:993d9b3e-8f85-44b0-898e-3a9ae0335f26
U2 - 10.1016/j.enpol.2016.08.032
DO - 10.1016/j.enpol.2016.08.032
M3 - Article
AN - SCOPUS:84986880428
VL - 98
SP - 390
EP - 399
JO - Energy Policy
JF - Energy Policy
SN - 0301-4215
ER -