Poland's Shale Gas: Benefits and Drawbacks

Again on the shale gas issue.

One of the reasons Poland was able to avoid a recession whilst everyone around them contracted was that Poland had an independent currency that happened to be valued lower than both the dollar and the euro.  This low-value currency makes Polish goods and services cheaper (and imports more expensive, which incentives Poles to buy Polish goods), also it makes Poland an attractive place to invest.  Foreign companies are tripping over themselves to set up shop in Poland (Dell, Fiat, GM, and now energy companies.)  The zloty is now being looked at as a cherished pillar of the Polish economy, and skepticism of the euro has grown (especially after seeing what happened recently to Greece.  Many in Greece lamented being tethered, which was relatively strong, and not being able to de-value the currency to give a jump start to Greek exports.  Also, China keeps the yuan pegged lower to the dollar for just this reason: to make Chinese exports more attractive.  Right now, many countries are engaged in a 'race to the bottom' of de-valuing their currencies.)
Huge energy reserves are a mixed blessing, and it is right to fear the onset of Dutch disease.  Dutch disease describes an economic condition where one commodity (usually energy or natural resources) becomes a main engine of the economy and the currency rapidly gains value against other currencies.  It's called a disease because with the rise in the currency, the country no longer becomes a feasible place to manufacture goods and its agricultural exports become more expensive.  Commonly-cited examples are Venezuela (oil), the US (financial services in the '80s and '90s), Russia (oil and gas), and, of course, the Netherlands (the discovery of gas).  When prices are high and everything is humming alone, it's all good; once the price of gas crashes, Poland's economy goes into a tailspin and only recovers when the price of gas does (this recently happened to Russia (the price of oil and steel dropped in 2008) and Venezuela.  It also happened to Ireland and Iceland with the banking crises.)  This can be mitigated by proper investment into wider areas of the economy.
A huge explosion (pardon the pun) of gas exports from Poland would undoubtedly cause the zloty to rise, maybe even overtaking the euro.  If that were to happen, Poland's developing manufacturing and agriculture base would come to a screeching halt.  Foreign companies would move their factories to cheaper countries and Polish-manufactured goods would become quite expensive.
The zloty's rise would, however, coincide with the mandated move to the euro (if the euro still exists around then.  Some think that the euro will be gone within five years, probably because Germany will pull out.  NOTE:  I'm not going to opine whether I think the euro will stick around.  I honestly don't know.)  So, the zloty's rise would be drowned out, because then Poland would enter into the euro area and the currency would depend more on the strength of the area than just that of Poland alone.

Beyond this sudden "doom and gloom" image I painted, the outlook certainly looks good.  Even if the zloty rises, that means that imports, and thus variety, are cheaper (I went shopping today, so I can tell you that I was none too pleased over the choices and variety of foodstuffs.  500 types of pickles, but no tahini: this isn't fair.)  The average salary in Poland, which now stands under $20K, would most certainly rise.  Poland would pour even more money into infrastructure improvements.  Also, it would help mitigate the problem of Poland's aging and shrinking population (another topic to which I will devote a post) by helping to prop up their pension and health programs.
Money is money, and resources are resources.  But Poland will have to be careful how it handles this new-found gas.  If they don't handle it just right, it might come around to bite them in the ass years down the road.

The Problem With Russia

It's no secret that not a lot of people like the Russians.  The Poles despise them, the rest of Europe doesn't trust them, and the North Americans view them with a mixture of distrust and misunderstanding.  Places like India and Armenia have warm relations with Russia (party because Armenia is surrounded by enemies and India needs an arms supplier that is not an ally of either Pakistan or China.)  The Serbs adore Russia and Ukraine is split: part of Ukraine wants warmer relations with Russia and the other parts loathes it.  I can also bring in the opinions of the Abkhaz, the Ossetians, the Georgians, the Chechens, the Ingush, and Kyrygz and the rest from Central Asia.
But let's move beyond lists of Russian-Foreign relationships.  Russia remains a center of concern for much of the West.  The 2008 war with Georgia drew widespread alarm (from the Baltic States, Poland, and Ukraine) and condemnation.  Don't be fooled, Russia is modernizing its military (the recently flight for the Sukhoi PAK FA T-50, the development of the S-500 missile system, the introduction of the T-90 tank, etc), and it aims to not be the embarrassing mess of the 1990s.  Beyond the military, Russia is trying to regain its sphere of influence (by using grants and loans) and push against US and EU intervention in the near abroad.  But, the biggest thing about Russia; what just gets those in the EU the most, is that it is an energy superpower with a heavy hand.
What is surprising is that Angela Merkel, the Chancellor of Germany, has had her nose hilt-deep in Putin's ass.  Or maybe it's not very surprising at all.  Germany, like most of Europe, needs Russia's oil and gas, and Russia is happy to oblige.  It's not that Germany admires Russia, or holds it in any esteem, it just wants easy access to reliable hydrocarbons.  Russia, however, is anything but reliable.  It seems like every winter they get into a tussle with Ukraine over unpaid bills, prices, and accusations of syphoning, and they threaten to turn off the taps, which they have done.  This actually does little to affect most of western Europe, since that gas goes through Belarus and Poland.  It will affect them even less when the Nord Stream pipeline is completed.  There are moves, such as the Azerbaijan-Georgia-Turkey pipeline to curb reliance on Russia, but it's not seen as much.
Beyond the common spats with Ukraine that disrupt supplies, Europe (consequentially NATO and its allies) has a bigger problems.  They can't really criticize or confront Russia very much, for fear that Russia might use energy as a weapon.  Thus, both the EU and NATO are usually bound with one hand behind their backs when dealing with Russia.  Russia throws a tantrum over something, and the rest of Europe is scrambling to think of how to calm it down without angering it too much.  If there was a serious mixup with Russia (politically or militarily), Europe would face a catastrophic shortage of natural gas, and Russia knows it.

Enter Poland and shale gas.  Optimistic forecasts of Poland's new shale gas wealth are extremely high.  Some are even calling Poland the next Qatar (don't pull your pricks out of your pants just yet, lads.  Let's see how much gas there really is in that rock before your start rolling on your rubbers to party.)  Interest in Poland's potential gas wealth has exploded, with big-time US energy companies signing on.  Many an economist and energy trader suffered whiplash from the speed at which they turned their heads to Poland.
Shale gas is becoming quite lucrative in the US, with many companies 'perfecting' its mining.  New wells are being drilled constantly, often without thought of environmental impact.  It's been said that many families in rural Pennsylvania (a top shale gas-producing state) can light their tap water on fire.  It's likely that there will be greater restrictions and discretion in the permit process than currently in the States, which might slow development down a bit, but also might protect the inhabitants and environment a bit more.
But what does massive gas deposits mean for Poland?  Will Poland turn into one of those hydrocarbon-reliant wonderlands where no one pays taxes, the government builds massive phallic buildings, and everyone is rolling around in obscene amounts of petrodollars while getting laid?  Who knows (don't try to predict what will happen; you won't be right.)  The point is, is that Poland stands a lot to gain both economically and geopolitically.  Poland now gets about 70% of its gas from Russia and if Poland could produce enough gas to meet domestic demand (which would inevitably rise), it would be a amazing.  If Poland could export gas to the conveniently-close-and-in-the-European-Union Germany, Czech Republic, Slovakia, Lithuania, and Austria, it would a miracle.  Many of these countries are overwhelmingly reliant on Russian gas, and most of them think of Russia as kind of a dick.
The role of Poland in European politics would be immensely bolstered.  Poland would be seen as a stable, reasonable ally that was worth protecting.  Its strategic importance to the EU (and NATO) would expand greatly.  Not only would it be a frontier state, it would be an important source of energy for its allies (this translates into: Europe and NATO would do a shitload to protect Poland from any sort of aggression (just like the US did with Kuwait) because it would be in their (Europe's and NATO's) strategic and economic interest.)  Some might say that Russia would also sight its sights more keenly on Poland, since Poland would be seen as a key state to Europe's security (from an energy standpoint.)  A worry and criticism from Poland, is that the US did not do enough to shield Georgia from Russia; they worried that the US would do the same to them (this is one of the reasons spurring Poland to accept the missile silos, which were downgraded to patriot missiles.  They felt that if Russia was to invade (and the Poles don't put it past the Russians) that the US would only come to their aid because American troops and interests would be directly threatened.)
Poland, meanwhile, is hedging its bets and is in the process of signing a deal with Russia that will last until 2045.  Until the real results can start flowing from Poland's gas fields, Poland and the EU will still be suckling on the metaphoric gas-nipple of Mother Russia.

Currently Poland's top gas producer.

Angela Merkel.  Her boner will be second only to Tusk's in the event that Poland exports gas.

The New Hot Thing: Shale Gas

Everyone is bulging in their pants talking about shale gas (at least that the idea I get while cruising the Interscape.) But it's not just those blogging on the Interbutts or politicians giving sound bites, there is real action going on.

The big news is that companies such as ConocoPhillips and Marathon Oil have bought leases to explore potential new gas sources in Poland. The natural gas exists in beds of shale, not just in a porous material. The rock is fractured to let the gas escape and be extracted by a well. It was, up until recently, not very economical to extract gas this way; however, newer techniques, such as horizontal drilling, have led to an explosion of exploitation of shale gas reserves. Shale gas has been mined in the US for some time now, and it's looking to export the expertise to the rest of the world.

As the cost of oil climbs, natural gas is almost constantly getting cheaper. Europe has a ravenous appetite for natural gas, which it uses for heating. Europe is particularly at the mercy of Russia, which exports most of its gas that way through Ukraine. Every winter, it seems like, Ukraine and Russia play a game a chicken, where Russia threatens to shut off the gas (which it did in the winter of 2008-2009) unless Ukraine pays higher prices and stops stealing it for their own use. Countries in Central and Eastern Europe are particularly vulnerable to Ukraine and Russia's game over energy. States such as Bulgaria, Serbia, and Romania are usually the first feel the pinch when the valves close.

Since Russia can be a pretty big dick about it, Europe is constantly looking for new energy supplies. Pipelines through the Caucus Region and through Turkey are particularly prized. It would be even better if Europe could produce the gas themselves. In steps the USA with its massive energy companies who have been doing this thing for some time now. The companies are looking beyond US borders for even bigger prospects in places you might not think.

Poland will be the first to start seeing if it has what every sovereign state covets: a massive energy supply sitting under their pasty, white tushes. Ukraine, seeing that its neighbor is expecting a windfall right near the border, is positively euphoric about the possibility of finding one of their own. No more having to bicker with Russia about gas (or bicker as much, as these gas finds probably won't fulfill their needs.)

The whole thing is though, is that no one really knows if there is gas there and how much. Everyone knows that Poland has coal (coal and gas often go hand-in-hand) but coal is dirty, can be dangerous to mine, and isn't the moneymaker that gas can be. Natural gas is used in industry, for heating, used to generate electricity, is used pumped into oil wells to force the oil up, and can help enrich fertilizers. To be short, gas is gaining importance rapidly, and Poland could (or could not) become a player in the field.