Arctic Economics

The Arctic's evitable gas industry

There's a lot of natural gas in the Arctic: maybe 30% of the world's undiscovered natural gas resources.  But the value of those resources, and the likelihood of development, depends on the availability of substitutes. 

Unfortunately for Arctic jurisdictions hoping to cash in on their resources, there's been a big increase in the availability of substitutes recently.  The Economist has an overview this week: Natural gas, An unconventional glut.  

China's Interest in the Arctic

Linda Jakobson of the Stockholm International Peace Research Institute reports that potential Arctic sea routes to New York and Europe have attracted the attention of the Chinese: China prepares for an ice-free Arctic:

Because China’s economy is reliant on foreign trade, there are substantial commercial implications if shipping routes are shortened during the summer months each year. Nearly half of China’s gross domestic product (GDP) is thought to be dependent on shipping. The trip from Shanghai to Hamburg via the Northern Sea Route—which runs along the north coast of Russia from the Bering Strait in the east to Novaya Zemlya in the west—is 6400 kilometres shorter than the route via the Strait of Malacca and the Suez Canal... Moreover, due to piracy, the cost of insurance for ships travelling via the Gulf of Aden towards the Suez Canal increased more than tenfold between September 2008 and March 2009.