Prime minister David Cameron is the snake oil salesman for
the fracking companies, making claims about jobs and he knows are false while
attempting to bribe councils to speed up controversial planning applications
that local people oppose.
Visiting a drill site in Lincolnshire this week, he claimed
that a fracking boom would create 74,000 jobs and bring investment of £3.7
billion a year to local areas. But those are figures from the crazy free
marketeers at the Institute of Directors.
Why is the government using these figures, instead of the more
measured claims from research commissioned by its own environment department?
Energy consultants and engineers Amec have said even if the
UK goes all out for fracking, the number of new full-time jobs at the absolute
peak would be between 16,000 to 32,000. Indeed, the very same figures are
quoted in a government
press release published only last month!
Amec’s forecast amount to just 7% of the total number of
people already employed in the gas industry; the government could achieve that
increase just by making a modest investment in helping people replace out of
date gas boilers!
Yet, incredibly, the government’s own web page carrying
Cameron’s speech sends you to the IoD
research, rather than its own!
Cameron knows fracking will not cut energy bills, because energy
secretary Ed Davey told him so. “North Sea gas didn’t significantly move UK
prices – so we can’t expect UK shale production alone to have any effect,”
Davey said in a
speech last September.
As economist Lord Stern explained, fracked gas will simply
be hurled on to the world energy market. “I do think it’s a bit odd to say you
know that it will bring the price of gas down. That doesn’t look like sound
economics to me. It’s baseless economics,” he
told The Independent.
Cameron is slavering over the US fracking boom, but gas
prices there are rising. At the boom's peak they were $2 per million thermal
units in 2012 but a year later doubled to $4 per million thermal units. In
2013, US power companies switched back to coal, and for the first time in eight
years the country’s CO2 emissions rose, by 2%.
The volume of gas in a shale is very different from the volume
that can be profitably extracted. Wells become unproductive rapidly, so more
and more must be drilled to keep production up. It costs more to produce less;
profits fall and investors pull out. The shale gas bubble in the US is already
bursting.
The point is that whatever the fracking companies do – drill,
not drill, profit, not profit – the consumer is always at the mercy of the
world energy market and that never operates in their interests.
Cameron announced a series of desperate bribes aimed at
overcoming local opposition. All the business rates from fracking will go to
the local council, and communities will get pay offs from the frackers. Along with
that paltry carrot goes a big stick. The time between application and decision will
be cut to just two weeks, giving communities no time to organise opposition.
The government boasts it has created the most competitive
tax regime in Europe for shale gas, even lower than in the US, so the Treasury
will get very little from frackers to put towards paying off the deficit.
So why is the government going down this road? They are desperate
to find new areas to attract speculators with even a sniff of profit-driven
growth. But in reality they are simply pushing another asset bubble, as we
wrote in Fracking
Capitalism:
"The insatiable global demand for energy drives
speculation in shares of the fracking companies, causing an asset price bubble
that, like all bubbles, will burst. When over-optimistic production goals are
not met, and it becomes impossible to go on producing the gas at the prevailing
low market price, the massive debts of the fracking companies will be another
phase of sub-prime junk debt."
Still, when growth at any cost is the only game in town
fracking looks worth a punt. But whatever Cameron says, there is absolutely nothing
in it for us. Get your copy of Fracking
Capitalism and join the debate about
alternatives.
Penny Cole
Environment editor
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