UK industry and manufacturing are being put at a serious...

UK industry and manufacturing are being put at a serious competitive disadvantage by the low price of energy in rival nations, chiefly the US, according to a major report published on Tuesday.

As much as 10% of Europe's market for energy-intensive industrial products, including iron and steel, glass and chemicals, could go to competitor nations within the next decade, it said. The finding has profound consequences for jobs, the economic recovery and climate change policies, and will send shockwaves through European industry.

The International Energy Agency – regarded as the gold standard for energy data – warned that Europe, Japan and other nations were being outpaced by the US in competitive terms, because of the very low price of energy in America resulting from the shale gas boom there. In its annual World Energy Outlook, the organisation warned that the price differential was likely to endure for decades.

Fatih Birol, chief economist at the IEA and one of the world's foremost analysts of energy, told the Guardian: "Today, there is a substantial gap between the US and Europe in gas and electricity prices. This is a serious problem for Europe. It's even more serious because this differential in prices will remain for at least the next 20 years."

He predicted that energy intensive industries in the UK and Europe would suffer a 10% decline in their international market share. "This will have huge costs in terms of employment, as there will be significant losses. There will be a knock-on effect on the whole economy."

... the main source of the price differential in the US's favour is the low cost of shale gas there. Europe is unlikely to be able to emulate the US's exploitation of shale gas and oil, partly because it lacks the natural resources and favourable geology, and also because the continent is so much more densely populated.

... He recommended that European countries should renegotiate their gas contracts with overseas suppliers, two-thirds of which are up for renewal within the next decade. "That is crucial," he said. Most of the contracts were negotiated 10 or 20 years ago, when the outlook for gas was poorer, and so could be brought down markedly in price.

... A further measure is to invest more in domestic energy supply, including shale gas but also nuclear energy and renewables, which Birol said could be exploited in a cost-effective way, without damage to competitiveness.

Full article: http://www.theguardian.com/environment/2013/nov/12/us-energy-shale-gas-uk-industry