No shale gas price revolution
An oddly wide of the mark intervention in the fracking debate from the chair of the Fuel Poverty Advisory Group, Derek Lickorish. Apparently, “Ministers have a duty to promote the extraction of shale gas because it has the potential to drive down the cost of energy.” True, domestic dual fuel bills are now at a record high of £1,365 per annum. But, as analysts Deutsche Bank have concluded, “Those waiting for a shale gas ‘revolution’ outside the US will likely be disappointed, in terms of both price and the speed.” Fuel Poverty Advisory Group’s last annual report called for carbon taxes to be spent on domestic energy efficiency. It makes no reference to enhanced oil and gas exploitation for fuel poor households in Great Britain.
The government gas price forecasts show prices rises from 61p per therm in 2012 to 72p in 2018 [blue line, central scenario]:
Yet, according to Derek Lickorish, protesters against fracking risk worsening the plight of the five million households struggling to pay their energy bills. Lickorish, previously of EDF Energy, adds that “the voice of the fuel poor has been lost in the current frenzy” at Balcombe, West Sussex.
However, Deutsche Bank’s special report, A first look as EU shale gas prospects, concludes:
Those waiting for a shale gas ‘revolution’ outside the US will likely be disappointed, in terms of both price and the speed at which high-volume production can be achieved. We believe it is too early to judge the recoverable resource size, let alone what commercial production rates may be possible.
Prime among the uncertainties are the size of the recoverable resource, the rate at which production can be achieved, and the extent to which the concerns of local residents and environmental groups can be accommodated.
As a result, whilst we think that EU shale-gas deposits certainly have the potential to contribute meaningfully to indigenous production over the next 10-20 years, we do not expect the impact of shale-gas production on EU gas prices to be anywhere near as great as has been the case with US shale-gas production
And we reported yesterday that Ofgem saw no connection between gas fracking and lower energy prices. .
According to Ian Preston Senior Analyst at the Centre for Sustainable Energy, fuel poverty has rocketed back up to over 5.1m households in England from a low point of 3.5m in 2010. DECC’s redefinition of fuel poverty has reduced the number to 2.8m households, “but 2.8m is still a shocking figure that needs to be addressed. So it’s imperative that those working on fuel poverty or in fuel poverty challenge the Government to set an objective that meets the scale of the challenge.”
The Fuel Poverty Advisory Group latest report called on the Chancellor:
To use carbon tax revenues to fuel poverty proof poor housing for low income households would have multiple benefits in addition to living in a warmer more energy efficient homes, including carbon reduction, improved health, and economic growth. Over the next 15 years £63 billion will be added to consumers’ energy bills through the Carbon Price Floor and EU ETS. The French, Estonian, and Australian Governments are all recycling some on their carbon revenues back to consumers through insulation measures and in Australia, compensatory welfare benefit increases.
The full refurbishment of homes in fuel poverty could provide 71,000, frequently semi-skilled, construction industry jobs by 2015.