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gas industry; the government could achieve that increase just by making a modest investment in helping people replace out of date gas boilers!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.