FACT: Although this claim has been made by many politicians and supporters of fracking, most economists and gas industry executives do not believe this is the case because of the nature of the EU energy market (see above) and the amount of gas available, which is relatively small in relation to the whole European market. This claim is made partly because the price of gas has fallen in the USA (see above) because of fracking and therefore some people think that the same would happen here – thus showing a lack of understanding of basic economics and the difference between a closed market and an open market. David Kennedy, head of the Committee on Climate Change – the government’s official adviser – said that “fundamental economics” showed bills were unlikely to fall. “It is highly unlikely to happen here. There isn’t enough shale gas in the UK and in Europe to change the European market price.”
Here are some more quotes from economists, politicians and fracking industry executives who don’t think that fracking will lower gas prices:
Lord Stern of the London School of Economics: “I do think it’s a bit odd to say you know that it will bring the price of gas down. That doesn’t look like sound economics to me. It’s baseless economics.”
Lord Browne, ex-Chairman of fracking company Cuadrilla, said: “We’re part of a well-connected European gas market and unless it is a gigantic amount of gas, it is not going to have material impact on price.”
Professor Jim Watson, Director, UK Energy Research Centre: Researchers from the UK Energy Research Centre (UKERC): “It is very frustrating to keep hearing that shale gas is going to solve our energy problems – there’s no evidence for that whatsoever… it’s hype. It’s extraordinary that ministers keep making these statements. They clearly want to create a narrative. But we are researchers – we deal in facts, not narratives. And at the moment there is no evidence on how shale gas will develop in the UK. Shale gas has been completely oversold. Where ministers got this rhetoric from I have absolutely no idea. It’s very misleading for the public.”
Ed Davey, Secretary of State for Energy, Department of Energy and Climate Change (DECC) said during the last government: “North Sea gas didn’t significantly move UK prices – so we can’t expect UK shale production alone to have any effect.”
We could go on, but you get the point. Also, next time you hear a politician claim that fracking will result in lower prices, listen carefully to the words used. Since this myth has been so roundly debunked by economists, politicians and industry insiders alike, what they now say is things like ‘Fracking could lower prices’ or ‘Fracking has the potential to lower prices’, or Fracking may result in lower bills for hard-working families’ – thus perpetuating the myth without actually saying it.
We’re also told that we shouldn’t be worried about fracking, because of Myth 3: