Tom Steward, IGov Team, 28th January 2013
Speaking at the World Economic Forum in Davos, David Cameron once again allied the ideas of shale exploration, and cheaper gas prices. He called attention to the effects that the shale revolution has had in the US, particularly in relation to falling energy prices as permitting ‘re-shoring’ of industry. Something he is keen to see replicated in Europe, and particularly in Britain. This is not the first time Cameron has suggested that shale exploitation will reduce bills however, something he proposed when writing for the telegraph last year.
There are however, very few people who share Cameron’s certainty that UK shale gas will have such a dramatic effect on prices. In fact, the list does not appear to stretch far beyond the Chancellor George Osborne.
However, the line of those individuals and organisations who have set out that fracking will do little to benefit our energy prices, is getting ever-longer. These include Ed Davey, Energy Secretary, Chatham House whose report stated ‘The idea that a UK shale gas revolution would lead to significantly lower gas prices is a myth.’, and Bloomberg: New Energy Finance who added ‘Exploitation of the UK’s significant shale gas resources is unlikely to result in low natural gas prices’. Even the chairman of fracking company Cuadrilla, Lord John Browne has voiced expectations that UK shale drilling will have no significant impact on prices. Ex-Energy Minister Chris Huhne also weighed in with a scathing article in The Guardian setting out why fracking would do little to help reduce UK energy prices – along with a number of other reasons why we shouldn’t count on it happening at all. In addition there are some, such as the Energy and Climate Change Committee, and the Institute of Directors, who are of the opinion that it is too early to know for sure what the impact of shale will be on prices. Too soon or not, the overwhelming balance of opinion is clear – the relationship between fracking and price reductions is far from a done deal.
Fairly obviously, aside from conversations about prices, there are a number of factors to consider in the fracking debate: the environmental impact, job creation, tax revenues, and potential for increased lock-in to hydrocarbons. However, this is not intended as a ‘to frack or not to frack’ blog, but to call attention to what we might take from Cameron and Osborne’s approach to fracking’s impact on bills.
In spite of the consensus view appearing to be that fracking will do little or nothing to reduce bills (or at the very least that it is too early to know), those at the top continue to tout the opinion that shale drilling will categorically lead to bill reductions. This could be down to one of two options:
1) Our senior leaders are poorly advised, and are therefore simply unaware of where the debate on fracking has now reached.
2) Our senior leaders are well aware of the general views on the likely bill impacts of fracking, but choose to present the view that bills will be reduced as undisputed fact because promotion of fracking serves other agendas.
It is of course, impossible to say with absolute certainty which of these is the case, but whichever it is, we have a major problem. The first option would suggest a need for reform in how information is fed to decision makers, whereas the second signals a drastic need for change in culture among our leaders.
Meaningful policy, with buy-in from a public that is fully engaged with the issues, cannot occur unless those at the top are honest and transparent about their motives; giving clear messages that are consistent with the best available information. This is especially important in debates involving energy. We in the UK have a history of being passive consumers, the majority of the public are disconnected from how energy is generated, and what they can do to best alter their consumption. A successful transition to a low carbon future cannot be realised without the support of a population which is much more conscious of its energy use. However, is this a reasonable expectation if messages from those in power continue to be as confused and conflicting as they are today?
There is an inevitable risk that this blog carries the all-too-sweet scent of idealism – that expecting our political leaders to be informed, honest and transparent is possibly an ask too far. However, if in the wake of the financial crisis, corporate tax avoidance, and the horsemeat scandal we can put pressure on private companies to act with greater integrity, surely the same should apply to those charged with leading the country.