Energy

If Europe Wants Fracking, It Needs Property Rights

REUTERS/Luke MacGregor (BRITAIN)

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Andrew Follett Energy and Science Reporter

Europe isn’t likely to see a natural gas boom like the U.S. because it lacks one key ingredient: mineral rights.

A report published by the European Geosciences Union in Nature Wednesday found that, despite years of exploratory drilling and huge environmental advantages, there are still no commercial natural gas wells in Europe.

“National governments in Europe own the subsurface rights, which is the principal reason the fracking revolution has been slow to spread beyond the United States,” Myron Ebell, director of the Center for Energy and Environment at the libertarian Competitive Enterprise Institute who was not involved in the study, told The Daily Caller News Foundation. “In fact, the United States is one of the few countries in the world where private landowners usually own the subsurface rights underneath their land and thereby can benefit financially from subsurface oil, gas, and mineral production.”

In the U.S., individuals own rights to minerals, oil and natural gas found under their property. Therefore, Americans have an incentive to allow companies to come in and extract resources on private property . That’s exactly what’s been happening in the last few years as property owners let gas companies hydraulically fracture for oil and gas.

The exact opposite is true in Europe and other countries, where mineral rights belong to the state.

The United Kingdom is one of the only European countries still trying to tap shale natural gas in Europe, but environmentalists have opposed the project and managed to slow the permitting process to a crawl.

“When the government owns the subsurface rights, landowners have no incentive to want to allow resource production beneath their property,” Ebell continued. “In fact, since oil, gas, and mineral production are disruptive, landowners have a strong incentive to oppose subsurface production.”

The American system of property rights has led to a huge boom in oil and natural gas production. America passed Russia in oil and natural gas production last year. As a result, American natural gas is so cheap it produced more electricity than coal for every month between July and October, according to data released in December by the Energy Information Administration.

“The right of private Americans to own their own mineral rights has been a key source of the U.S. oil and gas production boom,” William Yeatman, an economist at the libertarian Competitive Enterprise Institute, told TheDCNF. “By allowing private parties to own subsurface mineral rights, and thereby profit off oil & gas production, the U.S. incentivized both output and innovation.”

Europe’s failure to frack has greatly increased its dependence on imported gas, mainly from Russia.

Russia used interruptions in the natural gas supply in 2006, 2009 and 2015 to put political pressure on Eastern European countries like Ukraine, Poland and the Baltic states. About half of Europe’s imported natural gas comes from Russia, and national leaders openly worry about the security of the natural gas supply.

Russia previously attempted to use its control over natural gas to bring Ukraine to its knees. Luckily for Ukraine, the country was able to reduce its dependence on Russian gas and switch suppliers. American LNG exports could compete against Russian gas, forcing the country to rethink how it treats American allies.

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