Matthew Sinclair is a senior consultant at Europe Economics.
North Dakota used to be poor: in 2001, the state ranked 38 out of 50 in terms of GDP per capita.
Now North Dakota is rich: in 2012, GDP per capita in the state was more than 29 per cent above the US national average. The state also reported the fastest growth in real GDP per capita for the second year in a row.
There are enormous opportunities and not just for those directly working in the oil and gas industry. Between 2007 and 2012, the transportation and warehousing industry in North Dakota grew at a compound annual rate of around 16 per cent, with 35 per cent growth in 2012 alone. Unemployment there is lower than in any other state.
Of course, every oil and gas field is different. But the incredible economic growth in North Dakota gives an idea of the kind of opportunity at stake when we talk about shale gas.
It is an opportunity for parts of the country that have been struggling for decades, in places like Lancashire, to enjoy prosperity that they have not felt in perhaps a century. The Institute of Directors estimated last year that investment in UK shale gas could peak at £3.7 billion a year, supporting 74,000 jobs.
But the opportunities are not limited to areas where shale oil and gas are developed. According to the International Energy Agency, industrial electricity and gas prices in the US are expected to remain at about half the level that they are here in Europe through 2035, in large part thanks to shale gas. That is an enormous saving for American families but it is also an opportunity for US industry. Lower gas and electricity prices relative to Europe saved them “close to $130 billion” in 2012.
If the development of shale gas has reduced prices so dramatically in the United States, there is no reason it cannot reduce prices significantly in the smaller European market. That could make an enormous difference for crucial energy-intensive industries from industrial chemicals to steel. It would then help every other industry that depends on those sectors as a part of its supply chain.
It is understandable that people worry about new developments like shale gas, but policymakers have to set those worries against the enormous opportunity that it presents. Any politician or campaigner tempted to take a cheap shot at planned shale gas development should think seriously about whether they want Britain to miss that opportunity.
For my part at least, that is why I joined twenty four other economists in writing to the Financial Times today, urging “politicians from all parties to get behind natural gas from shale”.