Europe is lurching through an energy crisis. Across Europe, consumer groups, governments and manufacturers are asking how their energy needs can be met affordably and responsibly.
Most economic wounds are self-inflicted, and this is certainly true of Europe. So-called green energy was popular with voters, but has not delivered reliable and competitive energy. Today, it is a massive drain on individual and governmental resources.
New York Times columnist Stanley Reed recently wrote that the signs are everywhere. Britain has been unable to reach a deal for its first nuclear power station since the 1990s. Spain, once a clean-energy enthusiast, is no longer as strong an advocate for wind and solar power.
Prices for permits to emit greenhouse gases represent a fraction of what they were a few years ago, meaning they are no longer doing their intended job of inducing utilities and manufacturers to invest in new technologies and switch to cleaner fuels. European parliamentarians are concerned about further rising energy costs companies already say are putting them at a competitive disadvantage.
The issue is far more acute than in the United States, where the shale gas revolution has done wonders to ease energy angst. “Europeans are getting increasingly concerned about energy,” said Corin Taylor, an analyst at the Institute of Directors, a British business group. “Manufacturers are looking at U.S. energy prices with envy and, if they can, they are making investments in North America.”
Shale gas is cheaper, abundant and cleaner than any other fossil fuel. Unfortunately, Europe is not yet developing its game-changing shale reserves because many countries rushed ahead with inefficient windmills. These are becoming increasingly unpopular, towering, noisy eyesores.
Unlike the North American energy market where natural gas is cheaper than coal, in Europe it is not. The disparity in prices follows regional market dynamics, which are skewed to low cost domestic shale gas in the U.S. and Canada while Europe’s natural gas is imported and priced accordingly higher. This price differential is expected to last because domestic shale gas development in European member states is proceeding more slowly than in North America.
Expect Europe’s energy problems to continue.
• Mike Piershale, a chartered financial consultant, is president of Piershale Financial Group. Send any financial questions you wish to have answered in this column to Piershale Financial Group Inc., 407 Congress Parkway, Crystal Lake, IL 60014. You also may fax them to 815-455-6453 or email Mike.Piershale@PiershaleFinancial.com