Economists’ back development of UK shale gas industry
Westminster will on Wednesday be urged to back fracking and “get behind natural gas from shale” in a letter to the Financial Times signed by 25 economists. The exploitation of shale gas is still in its early stages in the UK but it has already prompted a heated national debate, with strong local resistance in some areas where exploration has already taken place.
Opponents of fracking believe the process – which involves injecting a mix of water, sand and chemicals underground at high pressure to create fractures in the rock and release the oil and gas trapped inside – can pollute groundwater and trigger earthquakes.
There are also concerns shale gas production can increase greenhouse gas emissions and put local infrastructure under strain, particularly in rural areas.
But David Cameron has thrown his weight behind shale gas, arguing that it has the potential to lift the British economy and make the nation less reliant on unpredictable foreign sources of oil and gas.
The economists, who include Roger Bootle of Capital Economics, Patrick Minford of Cardiff Business School and David Bell of the University of Stirling, argue that shale gas from Lancashire could present significant opportunities for the country.
In their letter, which was organised by the North West Energy Task Force, a pro-fracking group, said shale gas exploitation could create thousands of jobs, ease the pressure on manufacturers, generate export-led growth and boost tax revenues.
Bob Rothschild, professor of economics at Lancaster University, said there were many “compelling arguments” in favour of shale gas. “There are many arguments from an economic point of view for developing this technology,” he said. “The British economy and the northwest in particular could benefit hugely.”
Prof Rothschild said there was the potential for lower energy prices if Britain followed the example of the US, where a boom in shale gas has transformed the energy market.
Glauco De Vita, a professor of economics at Oxford Brookes business school, said he wanted to see more research into the risks associated with fracking technology.
With that caveat, however, he wanted to see Britain exploit the opportunities to produce more gas domestically.
“The responsible development of natural gas from Lancashire’s shale presents a significant opportunity also to boost tax revenues for much-needed investment in north west regions’ public services,” he said.
It comes just weeks after Mr Cameron said his government was “going all out for shale”, announcing that councils would be able to keep any business rates generated by fracking.
The prime minister has also promised that drilling companies will pay a lump sum of £100,000 when a test well is fracked, plus 1 per cent of revenues from any site.