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The MTO, Germany’s shale gas ban and the future unemployment of Romania

18 July 2014
Bogdan Tudorache


The news according to which Germany gave up for good the exploration and exploitation of shale gas is circulating for a few days especially on social networking sites, in an attempt to divert public attention from reality. Public intoxication with the use of inaccurate information is not new, similar means were used in human history for thousands of years and never for altruistic purposes. More specifically, in modern history, the commissioners charged with propaganda, the largest PR firms, used information often truncated, for political or commercial purposes.

Following the conflict in Ukraine, the need for energy independence became increasingly clear and Romania is no exception – even if doing well in this regard. We are ranked third in Europe, according to some statistics, in terms of energy independence and yet we sell expensive gas at oligopolistic prices.

The need for energy independence became increasingly clear

The truth is that gas prices will not necessarily be lower if successful shale exploration and exploitation starts, but could be linked to international market prices and that would mean a lower price even today.

Germany appears to have viable solutions for everything from football to business and politics. Germany has credibility and Romania has not. It is very easy to destroy credibility in Romania, and was clearly seen in the case of Pungesti how much noise was made for nothing.

Explorations have not caused any environmental catastrophe, and the villagers protested in vain, on the basis of false information.

Exploiting is the different story, but as technology advances, certainly in the not too distant future drilling can take place without damaging the environment. According to Romanian researchers, this clean technology already exists and can be used without problems in deep wells.

New guidelines for shale gas exploration

Meanwhile, Germany issued via the Ministry of Economy and Environment new guidelines for shale gas exploration for depths bigger than 3,000 meters. According to Forbes, the German government will carry out its own assessment of the environmental impact of hydraulic fracturing, which involves drilling with water, sand and chemicals under pressure.

Germany has estimated reserves of 2.3 trillion cubic meters of shale gas, and the conventional gas production decreased by 10% both in 2012 and in 2013, after the ban on the use of fracking. If fracturing will be permitted, gas production could increase significantly, and fuel and electricity prices will fall in Germany, the country with the highest electricity prices in the European Union after the implementation of the transition from a predominantly nuclear production to a renewable one, since 2011. The price of electricity for households went up 80% in real terms between 2010 and 2013.

Shale gas would make competitive the German industry in relation to the U.S., for example, where companies benefit from lower prices of natural gas. Government issued new guidelines aiming to test the waters politically. Hydraulic fracturing does not enjoy popularity in Germany, and the public reaction will be evaluated carefully by the government before taking concrete measures.

Nothing has been agreed upon and it is unlikely that the government will grant broad permission to companies to pursue large-scale fracking on unconventional gas reserves over the next year.

But the guidelines are nevertheless a signal that the government is seeking a compromise with fracking’s opponents. And the government will allow the use of this technology if it can be done without harm to the environment, according to Forbes.

Germany will allow the use of this technology if it can be done without harm to the environment

In Romania, the situation is even less clear, also because of the political instability. But if Germany gives green light in the next two years to hydraulic fracturing, probably with the emergence of new clean technologies, why would veto it Romania?

Foundations and organizations living (read do business) from opposing to hydraulic fracturing will find other sources of income. And perhaps that Romania will benefit, with increased production and exports, of lower prices for gas.

On the other hand, the use of old, polluting technologies that would lead to ecological disasters, would mean the political end of any government, and political decision will not ever go to favor such a solution (see the Gabriel – Rosia Montana case).

However, before completely rejecting an idea, based on distorted information, we should remember where we are geopolitically. And how many hundreds of thousands of unemployed people we want to have over the next period, and who will pay for their unemployment, according also to the so-much disputed MTO plan.

Autor: Bogdan Tudorache

Active in the economic and business press for the past 26 years, Bogdan graduated Law and then attended intensive courses in Economics and Business English. He went up to the position of editor-in-chief since 2006 and has provided management and editorial policy for numerous economic publications dedicated especially to the community of foreign investors in Romania. From 2003 to 2013 he was active mainly in the financial-banking sector. He started freelancing for Energynomics in 2013, notable for his advanced knowledge of markets, business communities and a mature editorial style, both in Romanian and English.

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