The Washington Post reports that major European companies are queuing up to move production (and jobs and investment) to the USA, to take advantage of low energy prices, especially low gas prices as a result of the fracking boom. The oil industry, chemicals, steel-making. You name it.
I hesitate to say “I told you so”. I’m saying that too often these days, not least about the €uro, and about global climate trends. But I have indeed been warning for some time that our ruinous energy policies in Europe would undermine competitiveness and drive business, jobs and investment abroad. And I’m sorry to say that I was right.
Here in the UK, George Osborne, concerned that the price of emissions permits under the EU’s Emissions Trading Scheme was too low to send “the right signal to the market”, has introduced (appropriately, from April 1st) his new Carbon Floor Price. This insures that while the EU’s competitiveness versus the world is jeopardised, the UK is actually undermining its competitiveness not only with the world, but within the EU as well. We have given ourselves the worst of all possible worlds, and the FT is worried.
Meantime the US, which had tight restrictions on energy exports, now has so much gas that it is relaxing exports and looking for opportunities. The doom-mongers are still saying that shale-gas is short-lived, that output from wells rapidly declines, and so on. But that thinking doesn’t seem to be reflected in US policy so far.
Centrica, the UK’s largest energy company, has done a major deal with a US supplier to bring American natural gas to the UK — a move hailed by David Cameron as an important boost to our energy security. And I suppose in a way it is. I’d rather rely on the USA that on Russia and the Middle East, and regardless of political risk, diversification of supply sources is always a benefit. But it’s ignoring the real issue. All around the world, countries which were net energy importers are scrambling to develop indigenous resources. The USA. Even Israel. Yet the height of Cameron’s ambition seems to be to find a new overseas supplier.
We really must start, with great urgency, to research the availability of shale gas (and oil) in the UK, and Europe.
Of course I recognise all the problems. The UK is much more densely developed and populated than the USA, so local environmental considerations will loom larger. We just don’t know yet how big any reserves may be (although I understand they are substantial). We don’t know what the recovery costs will be, but they’ll certainly be higher than in the USA. If we establish commercial reserves, we don’t know how long they’ll last. And we have major issues with public acceptance, not least because of the massive anti-fracking propaganda from vested interests and global-warming true believers.
These are all advanced as reasons to put shale gas on the back burner, and to make do with imports. But on the contrary, they are reasons to get on as quickly as possible with research and investigation and test drilling.
The prize, of total or partial energy independence, local industry and jobs, reduced imports, and lower energy costs, is so vast, we cannot afford to ignore it. Energy availibility and cost is one of the greatest economic problems we (and our children and grandchildren) face. It would be a very great dereliction of duty not to pursue every practical opportunity for indigenous energy. If we don’t buy the lottery ticket, we have no chance of winning the prize.
So come on, Cameron, and Osborne, and Michael Fallon (Ed Davey is a lost cause). Snap out of your lethargy and get on with the job.