The appealing “common sense” argument that if you increase the supply of a commodity – in this case natural gas, by fracking – then the price is bound to fall. It’s obvious, isn’t it?
FACT: Domestic gas prices are set by vast international markets, so any gas produced would have to be a significant percentage of global supply to affect pricing. Therefore, industry body UKOOG’s (no doubt optimistic) claim that in 5 years’ time fracking could provide 0.1% of current global production[i], is simply too small to make any difference. And we have proof of that: UK North Sea gas production increased by 26% in the first half of 2022[ii] – an amount equivalent to just under 0.2% of global supply and that hasn’t affected the global price at all. So why would a smaller amount have any impact on the global gas market?
The Government cannot prevent domestically produced gas from being sold abroad or control the price: if companies can earn more money by selling gas abroad at market rates, then they will.
[i] Updated shale gas scenarios March 2019 website.pdf (https://www.ukoog.org.uk/images/ukoog/pdfs/Updated%20shale%20gas%20scenarios%20March%202019%20website.pdf), Chart 23 –5 years after start point = 150bn cubic feet = 4.25bn cubic metres. BP’s 2021 Statistical Review of World Energy 2021 (https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2021-natural-gas.pdf) – annual gas production = 3,853.7bn cubic metres
[ii] Energy supply crisis: UK gas producers boost domestic production by 26% in just six months (https://oeuk.org.uk/energy-supply-crisis-uk-gas-producers-boost-domestic-production-by-26-in-just-six-months/)