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The past decade has seen a sudden surge in shale gas production in the United States, and a dramatic drop in natural gas prices. The shale gas boom has major implications for the future of nuclear power. Projections for the cost of electricity suggest that natural gas will maintain an advantage over nuclear power for many years to come in the United States, and there is reason to believe that overseas markets could eventually enjoy some of the benefits of the shale gas boom. Uncertainties about the size of shale resources and the long-term productivity of new wells could affect the future price of natural gas in the United States but are unlikely to make nuclear power competitive with gas. However, public fears about environmental contamination could drive up the cost of natural gas. This paper urges companies and policy makers to address these fears in ways that build public confidence. Stringent climate policy probably would not eliminate the cost advantage of natural gas over nuclear before 2030, but could tip the balance after that. The biggest question mark looming over natural gas in a carbon-constrained world is the prospect of applying carbon-capture-and-sequestration technology to the resource.
