Economically & politically fracked: ‘Behind every picture lies a story’ – statistical reality versus PR-hype within the political project of unconventional gas in Britain

Let’s get one thing clear, this is not about conspiracy theories. This isn’t about a powerful elite meeting in darkened rooms to fondle their fluffy white cats whilst talking in menacing tones. This isn’t about class warfare. What the diagram below represents is simply business… big business!

(click link for full-size A4 slide – 1.4 megabyte JPEG image)

As the saying goes, ‘every picture tells a story’, and this one¹ is a bit more complex, and in many ways more bizarre than other comparable tales. It’s about a mystical belief system (‘economics’) which has become so abstracted from reality that it can no longer represent the truth it was created to describe – and which as a result has actually become harmful to those it was intended to serve.

Back in 2009 when I started looking at unconventional/extreme energy sources, essentially what I was trying to pursue was the data about those sources and what their impacts were. Four years on what I’ve discovered is that the data is readily available, and generally wholly contradicts the popular media/political storyline onunconventional gas² (a generic term comprising three distinct technologies – shale gas,³ coal-bed methane⁴ and underground coal gasification⁵). Instead what I’ve found, certainly over the last twelve months, is that I’m spending far more of my time trying to chase down who originated one or another egregious statements about these technologies, and other drop-forged⁶ bendings of the truth – and progressively less time actually focussing on the engineering or geophysical detail of technologies involved.

For example, take David Cameron’s energy advisor within the Prime Minister’s office. From 2011 to May 2013 that was Ben Moxham.⁷ Ben Moxham was a former personal assistant to Lord Browne,⁸ who was himself installed by David Cameron’s Government as ‘lead non-executive director’ at the Cabinet Office – and was subsequently responsible for parachuting large numbers of staff⁹ into Government departments from energy companies. Ben Moxham had been a vice-president at Riverstone,¹⁰ with joint venture partner the Carlyle Group,¹¹ one of the largest global investors in new and emerging industrial/energy technologies. And it just so happens that Riverstone had bought a large portion of Cuadrilla¹² – the company drilling for shale gas in Lancashire and Sussex – after its parent company got into financial difficulties.

Jump forward to May 2013. The Growth and Infrastructure Bill¹³ having been signed into law, a number of private sector advisors¹⁴ left. After his sudden departure Ben Moxham was replaced with Tara Singh,¹⁵ a former lobbyist with Centrica.¹⁶ Then, less than a month later, it turns out that Centrica is investing in Cuadrilla,¹⁷ buying-out a proportion of Riverstone’s holding in the company and funding the roll-out of gas production across Britain. And perhaps as a parallel track in this policy, David Cameron also appointed¹⁴ right-winger Peter Lilley¹⁸ to his advisory panel – renown for his opposition to environmentalists, and who within a week had launched a withering attack on anti-fracking groups¹⁹ in The Spectator (the article is well worth reading – if only for its entertainment value!).

The question therefore arises – in order to be energy and climate advisor to the Prime Minister, it is necessary that your corporate alma mater owns a large stake in Britain’s leading fracking outfit? Do you really think that the recent Lynton Crosby link to fracking²⁰ condemns the Prime Minister’s choice of advisors? Compared to the conflict of interests of both his current/last energy and climate advisor, and the involvement of figures such as Lord Browne and Lord Green in Government policy-making, the Lynton Crosby angle isn’t that significant.

There is a huge back-story to the diagram above. It’s not a ‘plan’, or a ‘conspiracy’, it’s just business. If my local council is doing something dodgy then I’ll get together with various other greenie friends and, mustering the resources of media and local political influence, I’ll do something about it. That’s not a conspiracy, or acabal of the powerless is it? It’s just everyday human socio-political action (e.g. how many times do you go to local green/political events and realise that it’s the same ‘usual suspects” who always turn up?). Do you think the world is any different for the leaders of the business world? – it’s just that when they play politics they’re drawing on a wholly different set of people, who’ve been to a more elite and select bunch of schools and universities, and worked in certain corporate entities, that marks them out as (in terms the economic interests involved), ‘one of us’. And, just like Millwall supporters, that fact that many people don’t like this doesn’t really bother them.²¹

Conspiracy theories about corporate power ignore that fact that, at all levels of society, we work in pretty much the same way. It’s just that when it comes to Government, getting “the right people” involved tends to involve a certain group of people who have certain family or political connections. For example – is Baroness Hogg²² on a number of large company boards, not to mention the Treasury board, because she’s an experienced economist; or because, apart from being an economist, she shares the political connections of her former-Tory Minister father Baron Boyd-Carpenter²³ and former-Tory minister husband Douglas Hogg²⁴. Long-lasting ‘elites’ of any description, just like other long-lasting human relationships, are bound together by a shared sense of trust.

Of course, just because people ‘conspire’ together doesn’t mean that they’re ‘out to get you’. Complex human societies have created hierarchies as a mean to manage complexity²⁵ – although that doesn’t always work out well when the top of that system tries to oppose inevitable changes to society over time. There is however one distinguishing feature that determines whether public offices are being used for good or ill. If the actions carried out are done ‘for the common good‘²⁶ of those who these people work on behalf of, then clearly – irrespective of who they are or their pedigree – there is some merit to their role. However, in the case of unconventional gas, there’s a whole lot of evidence that that isn’t so. For example, how often have we heard from the lips of politicians,²⁷ and hence the media, that unconventional gas in the USA has led to a dramatic, ‘game-changing’ decrease in American energy prices?²⁸

(click link to download slide – 118 kilobyte JPEG image)

Guess what? – if we look at the long-term trends²⁹ there’s absolutely no evidence of that. Apart from the price spikes cause by volatile markets in the early 1980s and late 2000s, ‘real‘³⁰ US residential natural gas prices has only been higher than today’s value for 16 out of the last 45 years! (that is, for almost ⅔ of the last 45 years, US natural gas has been cheaper in real terms than it is today). If we look at other price influencing trends, such as US primary energy consumption (PEC), we can see that other factors have influenced the falls in US gas prices. For example, the real declining trend didn’t start until after 2008, the year of the financial crash – and as the graph shows, the significant fall in PEC would have reduced demand, and prices, as the subsequent recession took hold (you can see a similar blip during the early 2000s recession).

What we find, if we look at some of the recent studies, is that the whole ‘shale bubble‘³¹ in the USA has been manufactured³² by the energy service companies and their Wall Street chums. And, as the financial reality of that process finally breaks through the layers of econmetric-twaddle spread across it in order to obfuscate the true facts, the wheels have now fallen off³³ that economic and political bandwagon.

Oh yes, and on that point, all these stories we’re hearing about record US natural gas production and the fact that the US is going to become energy independent or even a gas exporter? Yep, you guessed it – it’s complete good ‘ole home-grown bunkum too! Once the financial crisis exposed the reality of the US investment environment, it was clear unconventional gas had problems. The companies involved have recently written-off billions of dollars of investment in the last few years because they’re unlikely to make a return on their capital. As a result gas drilling has collapsed and, once the effects of that worked through the system, production has tailed off too – and on the most recent data at least, it has peaked and declined slightly. This isn’t so much solely due to problems with shale gas, but also because new shale gas developments are not matching the decline of existing conventional gas and associated gas fields.

(click link to download slide – 115 kilobyte JPEG image)

So, how will the political world react now that US natural gas production has peak/is falling³⁴, and prices are forecast to double³⁵ over the next 25 years? In reality they probably won’t react at all. Like the three wise monkeys³⁶ they’ll just keep on reciting the same mantras, immune to external criticism, and expecting us to follow their own ideological delusions. What makes me think that nothing will change is that, after a very long period looking at unconventional gas/extreme energy in the UK, what I find is that this whole debate has nothing to do with the real facts or available data. It’s a political and economic project, made to promote the ideology of a set of people who hold economic and political power; and that – when or if it finally plays out over here – it will lead to no appreciable benefits to Britain, or to future generations born long after today’s decision-makers are in the ground.

For the political operatives involved in this – and here I would name George Osborne, Lord Browne, Ed Davey (through the neglect of his duty to the ‘public good’ rather than active participation in the shale delusion), and arguably David Cameron himself – there’s a word which describes these activities… malfeasance³⁷. What we have here is a breach of the public trust by those who willingly went along with the shale gas charade; and that negligence is causing damage to society right now – through the failure to implement a truly sustainable energy and economic policy today, not just when the shale project goes wrong over the coming years just as it has in America.

Given the available data those involved should have discerned these technologies to be an engineered folly, akin to the miss-selling of financial instruments which brought down the markets a few years ago. That they did not see this, or chose to believe the distortions and fabrications of its promoters because they were more reassuring than the reality, is irrelevant. They should have been asking the basic questions about costs, impacts and benfits – and demanding the production of real and quantified data rather than the abstract hopes and projections of those who would have us believe that there are no ‘limits to growth’.

Finally, if you’re interested in the above issues, I’m organising another UK tour in the Autumn of 2013, taking the results of the last four years of my research on unconventional gas in Britain ‘on the train’ (I don’t drive!) to share with others. My usual conditions on tours apply – I require the costs of train travel plus a ‘donation’ (commensurate with the economic well-being of those attending the meeting) – and in order to reduce the costs of travel I might also need a place to stay. Train travel is usually a very large portion of my overall cost, which is why for a tour I like to programme meetings on consecutive days so that I can combine/sequence train and bus tickets to reduce the costs to a little as possible for each event. The trade-off for that is that I’ll need a floor to throw my bed-roll down on for the night. If you’re interested in organising an event in October or November, please email me – mei☮fraw.org.uk.

Article written by Paul Mobbs, UK collaborator for the Extreme Energy Initiative.  Watch his lecture at the University of London in Autumn 2012 here.

References

1. Paul Mobbs, Current Work: Download A3 ‘Fracking Organogram’ slide (1.4MB JPEG image) – http://www.fraw.org.uk/mei/current/slides/fracking_organogram.jpg.  Note that this diagram has been created from a few hundred separate sources – far too many to sensibly map out here – and which it has taken a few months to map out and create. The precise details of the relationships depicted in the slide will be the subject of my forthcoming writing project, and will be described in my forthcoming UK tour.
2. Environment Agency: ‘Unconventional gas: shale gas and coal bed methane’ – http://www.environment-agency.gov.uk/business/topics/126689.aspx
3. Wikipedia: ‘Shale gas’ – http://en.wikipedia.org/wiki/Shale_gas
4. Wikipedia: ‘Coalbed methane’ – http://en.wikipedia.org/wiki/Coalbed_methane
5. Wikipedia: ‘Underground coal gasification’ – http://en.wikipedia.org/wiki/Underground_coal_gasification
6. How Stuff Works: ‘What is drop forging?’ – http://home.howstuffworks.com/question376.htm
7. Guardian On-line: ‘Coalition faces an exodus of energy experts as funding for renewables is held up on grounds of cost’, 10/5/2013 – http://www.guardian.co.uk/environment/2013/may/10/climate-change-adviser-resigns-cameron
8. Cabinet Office press release: ‘Lord Browne appointed to key Whitehall role’, 30/6/2010 –https://www.gov.uk/government/news/lord-browne-appointed-to-key-whitehall-role
9. Guardian On-line: ‘Energy companies have lent more than 50 staff to government departments’, 5/12/2011 – http://www.guardian.co.uk/business/2011/dec/05/energy-companies-lend-staff-government
10. Wikipedia: ‘Riverstone Holdings’ – http://en.wikipedia.org/wiki/Riverstone_Holdings
11. Wikipedia: ‘Carlyle Group’ – http://en.wikipedia.org/wiki/Carlyle_Group
12. Guardian On-line: ‘Centrica’s stake in Cuadrilla says much about UK shale gas industry’, 14/6/2013 – http://www.guardian.co.uk/environment/2013/jun/14/centrica-cuadrilla-uk-shale-gas-industry
13. DCLG press releases: ‘Royal Assent for Growth and Infrastructure Act’, 25/4/2013 – https://www.gov.uk/government/news/royal-assent-for-growth-and-infrastructure-act
14. Independent On-line: ‘Coalition faces an exodus of energy experts as funding for renewables is held up on grounds of cost’, 11/5/2013 – http://www.independent.co.uk/news/uk/politics/coalition-faces-an-exodus-of-energy-experts-as-funding-for-renewables-is-held-up-on-grounds-of-cost-8611631.html
15. Independent On-line: ‘No 10′s new energy adviser is a former British Gas lobbyist’, 23/5/2013 – http://www.independent.co.uk/news/uk/politics/no-10s-new-energy-adviser-is-a-former-british-gas-lobbyist-8630040.html
16. Wikipedia: ‘Centrica’ – http://en.wikipedia.org/wiki/Centrica
17. Telegraph On-line: ‘Cuadrilla and Centrica unveil two-year fracking programme’, 5/7/2013 – http://www.telegraph.co.uk/finance/newsbysector/energy/10162416/Cuadrilla-and-Centrica-unveil-two-year-fracking-programme.html
18. Guardian On-line: ‘Climate change sceptic to advise David Cameron on foreign policy’, 10/5/2013 – http://www.guardian.co.uk/politics/2013/may/10/climate-change-sceptic-peter-lilley
19. The Spectator: ‘Britain can’t afford to surrender to the greens on shale gas’, 11/5/2013 – http://www.spectator.co.uk/features/8905731/the-only-way-is-shale/
20. Independent On-line: ‘Now Cameron aide Lynton Crosby’s links to fracking industry are explored’, 14/7/2013 – http://www.independent.co.uk/news/uk/politics/now-cameron-aide-lynton-crosbys-links-to-fracking-industry-are-explored-8708331.html
21. Wikipedia: ‘No one likes us, we don’t care’ – http://en.wikipedia.org/wiki/No_one_likes_us,_we_don%27t_care
22. Wikipedia: ‘Sarah Hogg, Viscountess Hailsham’ – http://en.wikipedia.org/wiki/Baroness_Hogg
23. Wikipedia: ‘John Boyd-Carpenter, Baron Boyd-Carpenter’ – http://en.wikipedia.org/wiki/John_Boyd-Carpenter,_Baron_Boyd-Carpenter
24. Wikipedia: Douglas Hogg – http://en.wikipedia.org/wiki/Douglas_Hogg
25. Wikipedia: ‘Collapse: How Societies Choose to Fail or Succeed’ – http://en.wikipedia.org/wiki/Collapse:_How_Societies_Choose_to_Fail_or_Succeed
26. Wikipedia: ‘Common Good’ – http://en.wikipedia.org/wiki/Common_good
27. Telegraph On-line: ‘George Osborne — fracking offers real chance of cheaper energy’, 19/7/2013 – http://www.telegraph.co.uk/earth/greenpolitics/taxandtheenvironment/10190877/George-Osborne-fracking-offers-real-chance-of-cheaper-energy.html
28. Financial times: ‘US shale gas to lead to lower oil prices’ – http://www.ft.com/cms/s/0/7b41f4e0-cc67-11e2-9cf7-00144feab7de.html.
29. Paul Mobbs/MEI, Current Work: ‘US natural gas prices and PEC’ slide – http://www.fraw.org.uk/mei/current/slides/us_residential_gas_prices_and_pec.jpg. This graph has been generated from the following USEIA datasets – Short-Term Energy Outlook, ‘Real and Nominal Prices’, June 2013 – http://www.eia.gov/forecasts/steo/realprices/real_prices.xlsx Table 1.1. ‘Primary Energy Overview, 1949-2011′, Annual Energy Review, June 2013 – http://www.eia.gov/totalenergy/data/annual/xls/stb0101.xls
30. Wikipedia: Real versus nominal value (economics) – http://en.wikipedia.org/wiki/Real_versus_nominal_value_%28economics%29
31. Post Carbon Institute: ‘Drill Baby Drill: Can unconventional fuels usher in a new age of energy abundance?’, February 2013 – http://shalebubble.org/drill-baby-drill/
32. Energy Policy Forum: ‘Shale And Wall Street: Was The Decline In Natural Gas Prices Orchestrated?’, February 2013 – http://shalebubble.org/wp-content/uploads/2013/02/SWS-report-FINAL.pdf
33. Club of Rome: ‘The Shale Gas Revolution: is it already over?’, 21/7/2013 – http://www.clubofrome.org/?p=6395
34. Paul Mobbs/MEI, Current Work: ‘US natural gas production and gas drilling rigs’, July 2013 – http://www.fraw.org.uk/mei/current/slides/us_natural_gas.jpg; This graph has been generated from the following USEIA datasets – ‘U.S. Natural Gas Gross Withdrawals (Mmcf)’, June 2013 – http://www.eia.gov/oil_gas/natural_gas/data_publications/eia914/bestestofgrosswd.xls; ‘U.S. Natural Gas Rotary Rigs in Operation (Count)’, May 2013 – http://www.eia.gov/dnav/ng/hist_xls/E_ERTRRG_XR0_NUS_Cm.xls
35. US Energy Information Agency: See page 76/figure 88, ‘Annual Energy Outlook 2013′, April 2013 – http://www.eia.gov/forecasts/aeo/pdf/0383(2013).pdf
36. Wikipedia: ‘Three wise monkeys’ – http://en.wikipedia.org/wiki/Three_wise_monkeys
37. Wikipedia: ‘Malfeasance in public office’ –http://en.wikipedia.org/wiki/Misfeasance_in_public_office