Reform School – why UK fracking won’t significantly reduce energy prices!
With the tedious media focus on any old drivel that emanates from Nigel Farage or “Dubai Dicky” Tice, the subject of fracking is rearing its ugly head again on various social media sites.
Perhaps inevitably, its proponents are relying on the suggestion that it will bring down UK energy prices.
One angry local resident ranted on Facebook “I live in Blackpool and I’m all for fracking, you green nutters just want everybody to live in poverty!“
When challenged to back his statement up with some facts he just became childishly abusive.
It seems prudent to put some facts down to refute the idea that fracking is going to reduce our energy bills in any meaningful way.
Key reasons why UK fracking won’t significantly reduce energy prices
Gas prices are tied to global markets
Gas is a globally traded commodity. Even if the UK produced more via fracking, wholesale gas prices are largely set by global supply and demand. Unless domestic production is large enough to override global trends, any extra UK supply would still be priced relative to imports and global benchmarks.
Lord Deben, the then chair of the UK’s advisory Climate Change Committee (CCC), made the statement that there was “no evidence that if the UK maximised fracking and North Sea extraction that it would have a meaningful impact on the international price of gas“. His comments were reported by Carbon Brief and The Independent in September 2022.
Scale & timescales are too small / too slow
Developing a fracking industry (identifying shale deposits, securing planning permissions, building infrastructure) takes time. It may take many years before production is large and reliable enough to affect supply significantly.
The industry’s own modelling suggests that a scenario with 100 well pads would take over a decade to develop and would quickly peak and then decline to zero again..
Even optimistic pro-industry reports tend to agree that even “vast” shale development would take a long time to translate into noticeable reductions in household and business bills. It would , however cause massive issues for local communities.
UK would likely export surplus / follow global pricing
If UK-produced gas were cheaper to extract (or taxed lower), there would be strong economic incentives to export surplus to higher-paying markets. This means domestic consumers may not benefit fully; producers tend to sell where returns are highest.
Also, UK production costs (including taxes, regulation, environmental requirements) may be significantly higher than other international producers, reducing the margin for much cheaper domestic supply. Estimates suggest UK on-shore fracking production costs may be 2-3 times higher than in the USA.
Costs & risks
Fracking has regulatory and environmental costs: monitoring seismic risk, ensuring water safety, planning delays, community objections. These raise the cost of production.
Also, many of the easier or more accessible shale resources may already be known; what remains might be more expensive to access or exploit. So marginal costs may be high.
Demand side and market structure
Even if supply increases, energy bills depend not just on raw gas cost, but on transmission, distribution, wholesale-market dynamics, taxes, carbon pricing, and how much of the energy system is gas-based. These often dominate or at least significantly affect end user prices.
While wholesale costs are the single largest component of a household energy bill; policy/levies, network charges and supplier costs also matter — so even a wholesale-price fall doesn’t drop the full bill. (Nesta / Ofgem breakdowns show wholesale is the dominant element). Only 40–60% of the final bill is attributable to wholesale energy costs (this range is consistent with recent breakdowns and emphasised by Nesta/Ofgem analyses; the exact share moves with the market)
Also, rising supply might reduce some upward pressure, but still, international price shocks (e.g. geopolitical issues, major supplier disruptions) or demand spikes (cold winters) can push prices up despite increased domestic production.
What the official sources / expert bodies say
The UK Energy Research Centre (UKERC) says fracking is not the answer to soaring UK gas prices — the focus should be on reducing demand (e.g. energy efficiency) because reliance on fossil fuels means ongoing exposure to price volatility.
https://ukerc.ac.uk/news/why-fracking-is-not-the-answer-to-soaring-uk-gas
The government in various statements has acknowledged that UK production is not currently large enough to materially affect the global price of gas, and so won’t drive big reductions in bills. So too has the industry with experts like Cuadrilla’s founder, Chris Cornelius, on record as saying:
“Even if the UK were to generate significant gas, we are not likely to see lower gas prices—any more than living next to a farm would mean paying less for milk.”
It seems unlikely, therefore, that Farage’s dream of abundant cheap energy from fracking in the UK has any more attachment to reality than the rest of the the back of a fag packet nonsense that Reform are currently peddling on the economy.
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