Why Europe Needs Shale Gas

Forbes -

Developing shale gas as a viable source of energy could help Europe out of the recession. Instead, it’s still another structural disadvantage. It doesn’t have to be.

Europe’s struggles to get out of the recession are handicapped by Europe’s very high relative cost base, particularly in costs for labour and energy.

Labour rates that are more than double those in the Asian region – and about 5 to 8 times as high as in China.

Figure 1: Difference in manufacturing labor costs around the world, 2010

There may not be much that European governments can do about the structural labour cost disadvantage, although countries such as Germany have made some progress. Labour costs are very much influenced by historical conditions and social security regulation. Labour costs in Europe are high and will remain relatively high in the medium to long term.

However, European governments can do something about the energy cost difference. And developing shale gas reserves is the most obvious.

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