Cameron’s Fracking Plea

British Prime Minister David Cameron made an appeal to the British public in Monday’s Telegraph to embrace fracking, outlining the benefits of exploiting the UK’s shale gas reserves and seeking to dispel what he called the “myths” surrounding the polarizing topic. No. 10 has been mounting a public relations campaign this summer to convince Brits that fracking is in their best interest; Cameron’s opinion piece is its most direct communique yet.

Cameron points out the energy savings that households will enjoy if Britain is able to successfully tap in to its shale gas reserves, which the British Geological Survey pegged at nearly 1,300 trillion cubic feet earlier this summer, roughly double previous estimates. America’s experience certainly seems to bear that point out, as US households and industries are enjoying bargain-basement natural gas prices. Cameron also wants Britain to try to emulate America’s successful brown jobs boom; he cites a study that predicts fracking can add 74,000 jobs for the UK.

But the British PM’s experience will differ from the US when it comes to compensating localities for the influx of drilling equipment, trucks, and supporting infrastructure that accompanies the shale gas industry. In the US, surface rights are accompanied by mineral rights; that is, if you own a piece of land, you likely own the rights to whatever is underneath that land, be it oil, gas, gold, or silver (unless a previous owner sold those rights or state law says otherwise). American property owners get paid for their trouble, but most countries don’t afford similar mineral rights to their citizens. In the UK, the government owns all oil and gas reserves, which removes an important incentive for local communities to go along with fracking. Cameron addresses this point in his piece in the Telegraph:

Companies have agreed to pay £100,000 to every community situated near an exploratory well where they’re looking to see if shale gas exists. If gas is then extracted, 1 per cent of the revenue—perhaps as much as £10 million—will go straight back to residents who live nearby. This is money that could be used for a variety of purposes—from reductions in council-tax bills to investment in neighbourhood schools. It’s important that local people share in the wealth generated by fracking.

That’s a savvy move to help combat the kind of NIMBY-ism that has threatened to stop Britain’s shale exploration before it even begins. And really, that’s who David Cameron is appealing to in this public missive. The Prime Minister has a tough task ahead of him: Britain’s geology is more crunched than America’s, which will make fracking more difficult, and the country is more densely populated, which will make it it less popular.

Still, shale gas can be extracted in ways that minimize the risks, and to the extent that it replaces coal and works in tandem with renewables, it can be considered green. Add to that the added energy security that such a domestic energy source brings, and you get a compelling case for hopping on board the shale bandwagon.

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  • Pete

    With regard to fracking, the U.S. has another advantage that the UK and other European countries don’t have.,

    As brought out by Robert Bryce in his “Power Hungry” book, strong private property rights in America made fracking possible.

    In most cases, development did not have to wait for the approval of some government to allow drilling on government land.

    • Corlyss

      I hope that stays true. The ignernt gits on the Supreme Court and the EPA evil minions have made such significant inroads into the concept of “private property rights,” and mostly under the radar, that it is very worrying. There’s not much left of the concept. The minute the Supremes said the state could confiscate property by eminent domain to sell it to developers, as they did in the Kelo case, we were set on an irreversible course because SCOTUS worships at the altar of stare decisis.

  • wigwag

    Given the fact that the man putting “the great back in Great Britain” is as politically toxic as effluent, its a real stretch to think that anyone will take the Prime Minister’s views seriously. Given the contempt he’s held in, the best thing he could do to support fracking is to come out against it.

  • Thirdsyphon

    The dirt-cheap natural gas prices Cameron is promising are a temporary blip created by the lag between the pace of gas extraction and the development of the infrastructure needed to export it. Once that infrastructure is in place, Canada’s price (and America’s price) will be the global price for natural gas, and our “free ride” as consumers will be over.

    According to analysts, this is the optimum outcome for aggregate economic growth. . . but I’d rather see $75.00 in the pockets of North American manufacturers and consumers than $100.00 in the pockets of oil companies, shipping companies, and various entities in the developing world. I realize that’s primitive, naive, mercantilistic economic thinking, and that the current state of affairs can’t go on indefinitely.

    But still, just because the current shape of the global economy is like a giant trough that ultimately sluices all growth to energy companies, bankers, and the developing world doesn’t mean that we need to be at pains to make the angle of the sluice get any sharper, any faster than it has to. I’d be in favor of letting North American manufacturers and workers enjoy a few extra years of borrowed prosperity. Lord knows they could use it.

    • Corlyss

      I’d think that assessment was up to your usual high standard if we hadn’t been bombarded for 20 years with the peak-oil nonsense. Predictions of energy dearth and resulting calamity have been proven so spectacularly wrong that I’m inclined to discount similar, even seemingly wise, cant regarding nat gas.

  • Atanu Maulik

    I wish the PM the best of luck. Even though it is impossible to convert the true faithful, I hope that he manages to convince enough people to get this going.

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