Dear Prime Minister, please show your shale gas working

The Prime Minister reckons we should "encourage fracking and cheaper prices" – could he please explain how the two are linked?

09 Aug 2013, 13:05

Hi Dave, I just had a quick question about your comments yesterday on fracking and shale gas. It's a pretty simple question, so I'm hoping you'll be able to answer it the next time you address the issue, which judging by the way the fracking story keeps evolving is likely to be in the next few days.

It's not the embarrassing question about why you said communities affected by fracking will get payments of £1m, when you obviously meant £100,000. Your office has already corrected the error and we'll assume it was a case of mis-speaking rather than a deliberate attempt to overstate the benefits.

It's not the politically tricky question about why you said you "don't think we're going to have a huge amount more" wind turbines, when your government's energy strategy calls for quite a lot more. We'll leave it to your Lib Dem colleagues to ask that one.

It's not the linguistic question about how you can assert "nothing is going to happen in this country unless it's environmentally safe", when you know there is a degree of environmental risk attached to any energy technology. Wind turbines do cause some bird fatalities, as many of your supporters are only too keen to point out, just as onshore drilling poses some risk of air and water pollution. It can be relatively safe, but nothing is fully "environmentally safe".

It's not even the obvious question about how you can assert "there is no question of having earthquakes" when an independent study concluded that the recent earthquakes experienced in Lancashire were likely to have been caused by fracking.

No, the question I'd really like answered is why you think fracking will lead to "cheaper" energy bills? Have you got some evidence to support this suggestion? Because if so it would really help your case if you shared it.

To be precise, you said: "I think we would be making a big mistake as a nation if we did not think hard about how to encourage fracking and cheaper prices right here in the UK. If you look at what's happening in America with the advent of shale gas and fracking, their energy costs in business and their gas prices are half the level of ours... The EU has about three-quarters as much shale gas as the US, so we are missing out big time at the moment and I want to make sure that Britain does not miss out."

Now I presume you meant to imply that encouraging fracking would lead to cheaper prices, because that is certainly the way the comments have been reported (if that was not the meaning you should probably seek to correct it pretty sharpish). Assuming that is the case, would it be possible to explain how this will work? Because there are plenty of people, including many in the gas industry, who are deeply sceptical fracking in the UK can lead to lower bills.

The thing is they know that even if the industry manages to convince a sceptical public not to oppose each and every shale gas planning application, it is still going to take several years (and in reality more like a decade) for the UK to start producing shale gas in any significant quantities. The problem is that even if this production boom materialises, all the projections suggest global gas demand is going to keep climbing at a rapid clip as emerging economies grow, meaning the modest levels of gas the UK produces (in global terms) will struggle to have much of an impact on prices. Of course, more supply would mean prices would be a fraction lower than they would otherwise have been, but I'm not sure this really constitutes "cheaper prices".

Perhaps you meant the UK would form part of an EU-wide shale gas boom, as your comments suggest. But then again, I'm not sure how realistic such a scenario is. After all, you'll be aware France has a moratorium on shale gas and the only European country that seems to be pursuing development in a serious way is Poland. Maybe you are planning to convince your European counterparts to change their minds, but you'll forgive people for wondering if this is possible, given the Germans and French are unlikely to pay too much heed to your thoughts on their energy industries.

So where is the evidence that fracking in the UK will result in cheaper energy bills? Obviously fracking did lead to lower prices in the US, but you know as well as anyone the US finds it far easier to exploit its reserves in North Dakota than we do in West Sussex. You also know one of the reasons US gas prices plummeted is because it did not have the export capacity to push its gas glut onto the world market. We do have that capacity, meaning any shale gas we produce is likely to see its price set by the European-wide market. Unless, of course, you are planning to ban exports. If that is the case, you should probably tell someone.

The thing is, I don't believe you think the UK, or even the EU, can replicate the US shale gas boom, and even if the UK did manage to develop a major industry I don't think you're planning to ban gas exports. All of which leaves us with a bit of a mystery as to why you think fracking can result in cheaper energy? Do you think the Asian economy is going to crash? Do you think the transition to renewables will prove so successful over the next decade that demand for gas will fall, leading to lower prices? Or do you have evidence the UK is sitting on enough extractable gas to single-handedly cover the projected increase in demand on the global market?

Of course, there is a case for fracking in the UK that has little to do with cost. You could argue it will enhance our energy security, reduce emissions compared to imported gas, help accelerate the transition away from dirty coal power and create new jobs and tax receipts for the Treasury. Personally, I'd have some further questions about how robust your promised environmental protections are and how compatible such a strategy would be with our long-term climate change requirements, but that is a debate for another day.

Instead, you've chosen to focus on the need to "encourage fracking and cheaper prices right here in the UK", when as far as I can see there is not much in the way of credible evidence to show that it really will result in "cheaper prices". It would be really great if you could show how fracking will lead to lower energy bills and maybe provide some details on precisely how much fracking will be required to actually hold bills down. Some of your colleagues may regard the north as "desolate", but faced with a choice between industrialising the whole region with fracking wells and investing in energy efficiency to curb energy bills I think most voters would prefer the latter.

As you will have gathered from recent media coverage, lots of people would love to hear an explanation as to how fracking will result in cheaper energy. Because without one they might think you are simply raising the prospect of lower bills in a desperate attempt to build public support for a strategy that a large chunk of the electorate are fiercely opposed to.

Looking forward to hearing from you,


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Previously known as the BusinessGreen Blog, James' Blog features musings, observations and occasional rants from BusinessGreen editor James Murray

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