Michael Meacher MP on Fracking

The dreams peddled by the oil and gas industries turn out to be fantasies

May 2nd, 2014

The one thing Osborne loves to tell us, constantly, is that the future of energy production lies in fracking and that he will do everything in his power to maximise shale drilling in Britain, even to the extent of allowing drilling to be carried out on private land without permission.   However this oasis of future riches has received rather a knock from the latest information in the US.   It has now been reported that the top 15 players in US shale drilling have written off no less than $35bn since the boom started, and that investors are beginning to pull out.   It has also become clear from the big shale basins in the US that production rapidly peaks, but then equally rapidly falls away.   This has been the experience in all but one of the major shale-gas drilling regions in the US.   The boom shows ominous signs a bust before too long.   The energy industry’s narrative of plenty in long-term extractable unconventional gas has been proven wrong. Then there is another narrative of plenty, this time denying peak oil and insisting there are growing global supplies of affordable oil far into the future.   This is now turning out to be equally flawed.   The truth is that capital expenditure on finding new reserves has soared whilst at the same time discoveries by major oil companies has dropped, and is still dropping.  In fact crude oil production, which meets some three-quarters of global demand, peaked nearly a decade ago in 2005.   And third, there is a growing risk of carbon fuel asset stranding whereby policy-making on climate change, or the possibility of it, causes investors to abandon significant amounts of oil, gas and coal assets underground, unburned.  Already some major financial institutions are starting to pull out of carbon-fuel investments.   Other institutions are holding their investments in place for the moment, but are pressuring carbon-fuel corporations to rein back capital being expended on efforts to turn resources into reserves.   That is bad news for an energy industry needing ever more capital to keep its narratives of carbon fuel plenty on track. Thus the fossil fuel industry likes to speak of the US becoming the new ‘Saudi America’ – a nation self-sufficient in oil and gas that exports to help allies in trouble, like Ukraine.   This is a blatant myth: US oil consumption is 18.5m barrels a day, but its production is only 8.9m barrels a day.   One wonders what part of that equation they’re going to export any time soon to save Ukraine and others from the clutches of Kremlin-controlled pipelines?