Market Watch: Europe’s economic joker: cheap energy

It isn’t hard to find reasons to be gloomy about the European economy right now.

Unemployment has just reached a 25-year high, industrial production is falling, and Spain has embarked on a kamikaze strategy of imposing deep cuts in public spending on an economy already in recession.

But it is just possible that the continent has a joker in its pack, something unexpected that might turn the economy around. Such as? Well, how about cheap energy? And lots of it.

In the United States, there has been a lot of excitement about the potential exploitation of vast new reserves of shale gas. It has driven gas prices in the U.S. to 10-year lows. And it has sparked talk of a revival of American manufacturing industry on the back of cheap energy.

How much? According to estimates by the U.S. Energy Information Administration, Europe has 639 trillion cubic feet of technically recoverable shale gas resources, three times its proven conventional natural gas reserves. That’s not quite as much as the U.S., which has 862 trillion cubic feet of shale gas and 273 trillion of natural gas. But it is in the same ball-park.  MORE