Factories might need to be closed. It may be necessary to ration power. To keep the lights on, we might have to make some difficult concessions to Vladimir Putin the Russian president.
Just a decade ago, Europe was at the edge of a fracking boom.
There is a lot of shale oil in the North of England. And even more in France and Poland. Our political leaders gave in to a few environmental extremists and allowed it to continue. Now, we are paying a heavy price for this. The least we can do to learn from it is to not repeat the same mistakes.
The European energy market is in for a difficult winter. Gas prices rose by more than 20 per cent in the past week, reaching new all-time highs. The strain is already being felt by power-intensive industries like chemicals. Domestic consumers are also feeling the pinch, as more suppliers go bankrupt every week and those who remain will increase prices sharply very soon. We all know why.
The Russian natural gas supplies have dropped, making it difficult for LNG to arrive on tankers from other countries like Qatar. Storage facilities have also been reduced. What has happened? The result? A classic bear market squeeze with prices spiralling. Those hedge funds that were right about the situation will soon be making huge profits. All others will be affected, and calls are already being made for yet another costly bailout by the government.
This is what’s odd. In the US, gas prices have barely moved despite European highs. US gas prices are slightly higher than the equivalent of an oil barrel, at just over $70, as compared to more than $220 across the Atlantic. What’s the difference? Do Americans lower their thermostats? They add a few more jumpers. They don’t. They actually use more power than us. The US, however, has a large shale industry with industrial-scale fracking. We don’t.
This isn’t because there is a shortage of shale gas and oil. There is plenty of it. According to estimates, the Bowland Shale Reserve in the North of England holds 37 trillion cubic meters of oil and natural gas. The Weald Basin, which runs from Tunbridge Wells through Winchester in the South, has plenty more oil and gas. There are also many more in Scotland, Northern Ireland, and elsewhere. France and Poland have vast reserves, with an estimated 137 trillion cubic yards. There is plenty.
No one is allowed to extract it. France enacted a total ban in 2017 and President Emmanuel Macron affirmed it. However, in this country, it has been kept on hold for more or less indefinitely as it has in most of Europe.
But, what was the real danger? Fracking in the US has one problem: the prices haven’t been high enough for it to be worthwhile over the past few years. It has otherwise been a huge success. To take just two examples of the many scare stories that its opponents have spun, the country has not been devastated by earthquakes or has not caused unborn babies to be born. It’s been fine.
The anti-frackers who dominated the debate made the anti-vaxxers look like pillars of scientific rationality. They propagandized a toxic mix of conspiracy theories and alarmism that was unsupported by evidence or reason. It’s even fairly clean.
Some evidence suggests that fracking produces more methane than coal, but it is still primarily used in Germany and Poland. However, the majority consensus is that it is about the same level as natural gas. It would have created wealth and jobs in the country instead of Russia if we had developed it. Prices would also have been stable and we wouldn’t have to make concessions to Putin. What would that have meant?
Instead, political leaders gave in to a few extreme environmental activists who were determined against any form of industrial development and stopped its spread across Europe.
We have actually created the whole crisis through an act of virtue signalling. We must learn from what is quickly becoming one of the most disastrous policy errors of recent times. Medium-term, we are committed to switching to renewable, clean energy.
The majority of our energy should come from wind and solar power. Technology is being developed to make this possible and more affordable in the 2030s. But it will take time. We could have been fracking our own way to energy security. It is a sad fact that timid policymakers are willing to compromise the medium-term interests and well-being of households and industry in exchange for short-term headlines.
This is a crime that the UK and Europe are guilty of. It will be our fault if we end up in the dark this winter and factories close,
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