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War dances around shales

Published on March 6, 2012 by: in: Economy

Judging from various statements and behaviors, politicians – and not just them! – sometimes think of Poland as of Kuwait – the country of rentiers, living on “manna falling from heaven” (or rather from the depths of the earth). You can understand them. What a wonderful prospect! You can always promise what social problems will be solved in the future due to the stream of money – this “manna from heaven,” flowing because of shale.

photo: chrstphre

photo: chrstphre

It is good, however, from time to time, to forget about dreams of that bright future and take a sober look at the background: international, social, and economic. Nothing yet we won, and many we may lose, if we do not deal with these matters in a prudent manner. Thus, the international background for shale investment in Europe is hazy and full of various dangers. France has imposed a ban on fracking – the extraction of shale gas. One can wonder why it has happened. Ecologists – fortunately for the French – were never too strong there. Therefore, it is not their influence that was the reason for the ban. Rather, it was the power of semi-state nuclear industry, which sees a potential competitor in shale gas.

Here, a pro domo sua note: you can also expect a French anti-shale propaganda in our country, because the French authorities and companies can think that the development of shale gas production may discourage Poland from building up nuclear power plants. From our perspective, it would be, indeed, a serious mistake, as the diversification of electricity production should be an important element of economic policy of the country.

International affairs combine with the internal ones. In the extraction of shale gas, Gazprom sees a huge threat to its position in Europe. Even the resignation of liquefied natural gas imports by the United States has reduced prices on the world market.  Shale gas fracking on a larger scale in Europe would dramatically reduce sale of Russian gas to countries of our continent.

Therefore, you should expect a rather exotic alliance of Russian state-owned corporations and ecologists sweet-talked by them, and scared (as usual) of the technological consequences – this time connected with fracking. You can always count that neo-Luddites will protest against any technology (excluding windmills and other very expensive utopias).

However, as long as the European Union will not interfere, it is not a case difficult to defend. Unfortunately, the level of imbecility of western bureaucracy – every kind of, not only international – is extremely high. One should keep in mind that the EU has huge advantages (common customs area and common market), doubtful offers (the euro zone in its present form) that are also undoubtedly harmful. The vast majority of regulations from Brussels do more harm than good in helping out the economies of member countries. One must be able to move around in this jungle.

Meanwhile, even if in Europe, the economic (not political or ideological) approach to shale gas wins, it can do us harm. Maybe the politicians should be more aware of the fact that the value of business comes not only with how much tax can be put on a company or companies. In most European countries, there are royalties laws – fees for the use of mineral resources of that country. We are now only pushing through something like that (it is in the form considered by experts to be harmful!).

Instead, they made something similar to a rally of the nomads on the rural population from the past, in the form of a tax on one company (KGHM Polish Copper). A fatal solution that tells commodity firms that we are not predictable. Not only external threats, a propaganda war against shale in the country, but also our own, very unfortunate war dances around shales may undermine prospects for shale boom, when it comes to Europe.

Translation: Martyna Kozik

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About Jan Winiecki

Economist, professor of Aalborg University and European University Viadrina in Frankfurt, co-founder and president of the foundation of Adam Smith Center, former member of the EBRD board, co-founder and former president of the Polish Economic Society, laureate of Kisiel Prize.

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