Monday, 13 January 2014

The Topsy Turvy World of Fracking

No links because this is all general knowledge/you'll have to take my word for it.

I've no particular strong opinion about fracking one way or another, but what I notice is that the usual rules of Georgists one side vs Home-Owner-Ists on the other, with the Greenies sometimes coming down on one side and sometimes on the other with no particular coherence, no longer really apply.

Exhibit One

Michael Fallon, arch-Homey and eternal LVT-opponent ("Poor Widows In Mansions being hounded by Armies Of Surveyors" ad infinitum) was on Radio 4 this morning to "sell" the Tories policy of allowing local councils to keep a relatively large share of fracking revenues (a Georgist principle and a good one).

He had prepared a rather strange answer to the stock question "Why?", which he trotted out more or less word-for-word twice, it went roughly like this: "Local councils should be glad that fracking will lead to more investment and jobs in their areas, so it's important that we allow them to keep some of the tax receipts to pay for the investment required to cope with the new investment and jobs."

The presenter asked him straight out, "So to whom does the shale gas belong?" to which he promptly and accurately replied: "It belongs to the government."

The presenter's follow up question was "In the USA, the shale gas usually belongs to the landowner, but seeing as it belongs to the government, why are you being so niggardly? Why not let local councils keep a half or even all the tax revenues, i.e. the value of the gas?"

Fallon replied that he thought the government had got the shares between local and central government "about right" but did not disagree with the general principle, he did not say that the Yanks have a much better system (which you'd normally expect him to say).

Exhibit Two

Fallon was then on Channel 4 News at 7 o'clock, up against some Greenie, who came out with the usual Homey/NIMBY spiel: "Britain is a small island, we have no room for this, it's going to ruin our land, the countryside etc.", which all of a sudden Fallon didn't seem to think was a problem.

Unusually, it turns out that our enemies' enemy is also our enemy, it was the sort of feeble TV debate you wanted them both to lose.

Exhibit Three

Normally, the Greenies and Lib Dems are thoroughly pro-EU, but all of a sudden they are not. Channel 4 News had some professor guy of that persuasion who disputed the claim that fracking would mean lower gas prices (which is the case in the USA, gas prices have fallen by two-thirds, it is said), because, he said, that gas would be freely traded with other European countries, so instead of us saving two-thirds, that saving would be diluted among all EU countries, which means that gas prices would only fall by five per cent (or whatever).

Well ho hum.

a) Either you are in favour of us being in the EU or you are not, you can't pick and choose.

b) If you are in favour of the EU, you must also be in favour of share-and-share alike, share the gains and share the losses.

c) From the Greenies' and Lib Dems' point of view, low gas prices are inherently A Bad Thing, because that means more fossil fuel will be used, which in turn causes Catastrophic Climate Change, innit? So they ought to be seeing the negligible price fall as a plus.

d) It doesn't actually matter. The total value of the shale gas (minus extraction costs) is whatever it is. If we have an export ban, then our prices fall a lot and the tax receipts will be correspondingly low. If we sell it for a higher price abroad, then prices will only fall slightly but tax receipts will be much higher.

On the whole, the Greenies and Lib Dems are in favour of higher taxes (in this case, they would be correct, land and natural resources are the perfect subject for taxation). So assuming that tax receipts on natural resources are spent for everybody's benefit equally, it actually leads to a better outcome if the shale gas is sold for the highest price on the international market - what you don't save in gas bills you'll save in lower other taxes (in principle - in practice we are going to get stiffed either way).

Exhibit Four

It is widely reported that fracking caused a minor earthquake up near Blackpool, this is accepted unquestioningly and trotted out by Channel 4 yet again.

But I'm thinking, they've detonated colossal multi-megaton nuclear bombs, underground, overground, Wombling free, and I've never seen much evidence that this causes earthquakes (even though I'd happily believe it, being rather anti-nuclear weapon by instinct).

So is it really possible that some people pumping a bit of high pressure liquid down into what is not exactly an inter-tectonic plate fault line caused an earthquake?

Exhibit Five

They showed the usual clips of Yanks lighting gas coming out of their taps, which they blame on fracking. I doubt whether it's that simple, but even assuming it is, so what?

We know that the Americans have an absolutely appalling attitude towards health and safety, accidents etc. Their economy/population is a bit smaller but otherwise as developed as Europe, but in terms of road deaths, rail crashes, industrial accidents, oil spills, pollution, explosions of unsafely stored flammable materials, friendly fire incidents, they are barely above Third World levels.

So however awful their record on fracking might (or might not) be, it's pretty much irrelevant as far as I am concerned.


Robin Smith said...

Yep, good one.

Sackerson said...

From what I read, fracking produces gas at high cost (in financial and energy terms) for a very limited period and most companies doing it are losing money. It may make a quick buck for others - perhaps in the way of taxes and licences - but it's like trying to get the last bits of peanut butter out of the jar.

Why is Balloon Head in favour? Ignorance, or some sort of Blairite future-career deal?

benj said...

Someone should have asked Fallon why potash 2kms underground belongs to the farmers, but shale gas doesn't?

Doesn't seem terribly consistent to me.

Antisthenes said...

Fracking does not cause water pollution as it cannot escape from where the shale is being fracked because the rock above is impervious. If fluids could pass through it then the gas would have seeped away long ago. The burning water experienced in the USA has long since been debunked as it was not caused by fracking but from small natural reserves of methane in the surrounding countryside that was leaking into the well that the water was being drawn from. Another misconception is that it uses large amounts of water that has to be disposed of afterwards. This is not true it does use a lot of water but the same water is reused time after time so after the initial uptake of water only small amounts are required for top up purposes. Another beef of the greenies is that multiple well holes have to be drilled. This was actually true at the beginning but now technology has moved on and fifty or more wells can be tapped from one drill hole. The information is out there but do not expect the eco-loons to look for it as the truth and fact gets in the way of their eco religion.

Kj said...

Complicated stuff. Sackerson: it probably has higher costs than regular gas wells when stuff comes out by drilling a hole, but the interesting part is whether it makes enough of a return to have a company do it and give a surplus for taxation. If it's a normal return business it's like most other businesses, but it then needs to cover it's external costs to make it an acceptable land use. Since american landowners have been happy to do away with extraction rights, and companies have been happy to do it, I'm assuming it pays off well enough.

Obligato said...

Add on to KJs comment - it seems to pay in the US - Even at their (much) lower gas price!!

on the issue of lower gas price in the US - up to now the US has had no gas export infrastructure (no pipelines, Atlantic and pacific too big - Canada and Mexico have their own gas) - only now are they starting to adapt LNG Import terminals into LNG Export terminals (very different animals) - so up to now gas produced in the US has had to be used in the US - guess what, that drives the price down

In the UK we have 3 interconnector pipelines - 2 across the North Sea and one across the Irish Sea - so our gas can indeed be sold freely and relatively cheaply on the European market. Who would sell their gas cheaply on the UK market when you could sell it at world prices in the European market?

Sobers said...

Don't forget that although even if you accept the 5% reduction Europe wide in gas prices as a result of fracking, this compares to the DECC assumption (upon which all the calculations are made as to whether renewables are cheaper in the long run) of (I think) a doubling of European gas prices in the long term. Thus a 5% reduction would blow a massive hole in the affordability of renewables - we would be paying double for our heat and light over what would be necessary.

Hence the massive opposition from the Greenies, because despite the fact that replacing coal fired electricity generation with gas would result in a big drop in carbon emissions (as has happened in the USA - their carbon emissions are back to 1990 levels due to the coal for gas swap) it would mean the death of their pet renewables. So they are opposing something that would actually help us achieve what they say they want - carbon emissions.

Sobers said...

Doh: that last sentence should end 'carbon emissions reductions'

Kj said...

Sobers: fair play, I found at least one article from the green-tinted media that acknowledged this:

But by far the most significant source of reductions came via the substitution of natural gas, made relatively cheap and abundant by fracking, for coal. This chart makes it plain how concerns about fracking, from groundwater contamination to earthquakes to methane emissions, need to be balanced against the massive bite it takes out of much more carbon-intensive coal, although some experts worry that long-term reliance on natural gas could also loosen the market foothold of renewables:

ageing man said...

What is interesting about the debate is that really, no one truely seems to know what the fuck they are on about. They shout alot that they do... but in all honesty do they ? I consider my self reasonably knowledgeable, I started my working life with an oil company albeit shipping the stuff rather than extracting it, but seeing the commentary played out through the news channels, it's not about what is true [what ever true is supposed to mean these days] but about how strong your rhetoric is.

One of the news channels last night had some bloke burbling on about why they shouldn't allow it, then they had another bloke burbling on why it should be allowed. I happened to recognise the 2nd bloke.... chap called cammeron.... but to be honest they both sound like uninformed dicks....

I suppose the answer is simple.... let em get on with it, and then when blackpool collapses and disappears into a sink whole, the whole nation can collectively shout.... see we told ya, but you just wouldn't listen.... which would be a pity as I have fond memories of the blackpool trams.

For me the plain truth is, I can't be arsed to care, because like the wind farms... if the agenda is there you will struggle to get the truth out.

Pogo said...

I think that the way to view the safety etc of fracking is to look at the USA where fracking is abundant and widespread - in the most litigious nation on earth... Even the EPA can't find anything nasty to say about it.

As for "burning water", I'm led to believe that the "flaming hosepipe" in Gasland 2 was arranged by connecting a propane tank to the other end of the hose. Simples!

Lola said...

"It belongs to the government." Not really. It belongs to the 'State', i.e. 'us'. Of course statist numpties really think it belongs to 'them', to ration out as they see fit for political capital. And once you admit it belongs to 'us', then the anti LVT argument collapses.

DBC Reed said...

There is always the house-price dimension. The slightest suggestion that fracking will depress house prices and the whole deal's off.

Mark Wadsworth said...

RS, ta.

S, you seem unduly pessimistic, I'm more with Kj on this.

Bj, inconsistency is their secret weapon.

Anti, ta for extra info (I tend to agree, but you're going the other way to Sackers).

SB, those pipes go both ways. Very handy!

Sobers/Kj, excellent point, make that Exhibit Six.

AM, that's Exhibit Seven.

P, yes, but who's to say the EPA aren't just covering up?

L, true, but in the context that's a minor quibble.

DBC, that's Exhibit Eight, when the Greenies make common cause with the Homeys.

Lola said...

MW. I don't think it is a 'minor quibble'. It's likely that Fallon does think that the 'government' owns it. I think he'd hate the idea that he was acting as a steward for all our interests and that the stuff was not 'his' to do as he wants with. Blokes like him need this pointing out to on a frequent basis and reinforced with minor personal violence (a good smack) when required.

Mark Wadsworth said...

L, sorry, what I meant was it was refreshing to see an arch-Homey accept that the gas didn't automatically belong to the landowner.

As he is a politician, obviously he overlooks that they are only stewards on behalf of everybody, he thinks that the money is the government's to spend as it pleases (which in practice, it is, I'm afraid).

DBC Reed said...

Talking of homeownerism :there have been some sensational developments in the international spread of this new political concept which (I think) should make us all very proud.Google (taking care with punctuation) *** Dicke Titten***wichfotos HomeOwnerism
Ref to HomeOwnerism (nb compromise version) is in the correspondence below. A full translation would be appreciated.

Mark Wadsworth said...

DBC, you've lost me. "Dicke Titten" is German for "big tits".

Can you email me the actual URL?

Lola said...

MW. Grrrrrr.

DBC Reed said...

No, I am not that clever with computers being a poetry loving arts type.
Typing the above as Google entry works every time.
Yes its a German porno site with some with impressive dicke titten (that I could translate). I was intrigued why one of the two googleable German references to Homeownerism crops up in this raffish context.

Kj said...

DBC: haha... I ventured into your reference. It´s dutch apparently, and I suspect it´s a bot (the kind that leaves spam messages) that has gone haywire putting random sentences together including the H-word.

DBC Reed said...

I thought it was Dutch but decided it was German because I could translate bits of it.
Not sure we should be pleased that robots are using the H-word ,considering the vexed question of robot factories that Frances Coppola is saying over on Tim Worstall's blog (on the subject of Picketty) is not compatible with capitalism.

Bayard said...

AFAIK, we've been fracking away in England for years, down on the Wych Farm oilfield in Dorset, with nary an earthquake. Also, quite major (for the British Isles) earthquakes have hapened here throughout history, long before anyone even thought of fracking.

Sackerson said...

@Bayard: The Dorset Echo worries about it -

Sackerson said...

... and here's John Ward:

Bayard said...

S, but it doesn't mention the Dorset fracking and gives no evidence to support its assertion that the Southport earthquake was caused by fracking, just produces it as an accepted fact.

Kj said...

Sack: I think especially the last site throws too much alternate argumentation into the mix, up to the absurd including immigration and size of the island.
The interesting thing is the environmental issue, the risk for long-term soil/groundwater contamination and local geological consequences. Financial issues/energy markets is not really that much of a public concern, save for tax purposes, infrastructure, and making sure that the operators pays their way in terms of external costs.