• Will Shale Gas Reduce Prices in the UK?

Fuel for Thought

Will Shale Gas Reduce Prices in the UK?

Sep 03 2014

As winter edges ever-closer, it’s only a matter of time before energy prices hit the headlines once again. It’s an all-too familiar tale - British households stretched to the limit by the cost of heating their homes. In the past, energy bill price leaps have reached as much as eight times the rate of salary increases. And in the light of this statistic, it’s clear the issue will not be going away anytime soon.

One thing is for certain: something needs to change. The current energy mix in the UK is not producing enough affordable fuel - and we as a country are suffering. But what, if anything, will help to reduce prices in the UK? And is the government’s policy on shale gas going to put money back in our pockets?

The great shale gas debate

The subject of fracking is never far from the news. And where there is fracking, there is a search for shale gas. It’s a hotly debated subject, often sparking angry protests from nearby residents concerned by the environmental impact. Yet perhaps the most universally pressing question is: will shale gas make us, as energy consumers, better off?

Fracking has enjoyed great success in the United States, as this article, Shale Plays Offer Unprecedented Opportunities, describes in more detail. The abundance of shale gas has increased supply and forced fuel prices down in the process. It’s a model that the UK is keen to replicate - but experts argue the same outcome is impossible on British soil. 

First, there’s the initial cost of shale mines, which far exceed the cost of ordinary oil or gas wells. They have a shorter lifespan too, so their cost per year is exponentially higher. In comparison to a normal gas well - whose production will decline at a rate of 7-10% per year - shale gas wells drop 60% in the first year alone. That makes the initial set-up costs very expensive indeed.

Then there is the issue of geology. The USA is a vast land mass, so there is plenty of space to mine for shale gas without affecting entire communities. The UK, by contrast, is much more densely populated. That means the extraction process is bound to have a political effect - and who can put a price on the amount of time devoted to protests, debates and column inches.

Of course, regulations are an issue too. Gaining planning permission for a fracking mine is a process that takes a great deal of time and resources. In fact, the timeline from exploration to production is approximately 20 years, so this is far from an immediate solution.

Can shale gas reduce prices?

When considering shale gas as a solution to rising energy prices in the UK, most experts agree it is simply too soon to be speculating. Shale gas is still an unknown. We know very little about the resources available in the UK. Instead, perhaps we should be investing our time and efforts into proven methods, such as petrochemicals, nuclear or renewable energy. That way, we can reliably produce enough fuel for the UK’s needs - altering the energy mix as and when new technology develops.

For more information on this topic, please read: A Closer Look at the Effects of the Shale Boom Worldwide


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