The government’s decision to make a US-style ‘dash’ for shale gas would not guarantee lower energy prices for domestic or business electricity consumers, according to the Energy Advice Line.
Julian Morgan, managing director of the UK’s leading business electricity price comparison and switching service, said shale gas was cheaper in principal than other sources of gas, but the cost of extraction was high.
“It remains to be seen whether pursuing shale gas will lead to lower energy prices for business electricity users or householders,” Mr Morgan said. “Many more questions need to be answered before it is clear whether the Chancellor’s emphasis on a US-style pursuit of shale gas reserves makes sense.”
The comments follow Chancellor George Osborne’s announcement in his yearly Autumn statement that the government is investigating what tax incentives to give the shale gas industry. He also announced the creation of a new department, the Office for Unconventional Gas.
Extraction of shale gas, a natural gas formed within shale formations, has boomed in the US where it has risen from 1% of natural gas production in 2000 to over 20% by 2010. It is predicted that by 2035 it will account for almost half the US’s natural gas supply.
Shale gas is a highly contentious energy source, with opponents arguing that extraction – known as “fracking”– poses a serious threat to the environment and may actually increase rather than reduce greenhouse gases. However, proponents say exploitation of shale gas will greatly expand the world’s available energy supplies and that environmental concerns have been exaggerated.
As well as the tax incentives for the shale gas industry, the Chancellor announced that the government intends to build up to 30 new gas-fired power stations.
“We don’t want British families and businesses to be left behind as business gas prices tumble on the other side of the Atlantic,” Mr Osborne said.
Mr Morgan said the Government needed to put a clear case forward about the benefits of financial backing the exploitation of UK shale gas reserves, the extent of which are still unclear.
“Many questions need to be answered about the environmental and financial implications of heading down the shale gas road,” Mr Morgan said.
“It could well be that shale gas is not going to be the silver bullet that some analysts predict. ”
The Energy Advice Line is the UK’s leading energy price comparison and switching services for business, and enables firms to compare the market for the best possible business energy deals at the touch of a button.
The service has a team of business experts who can give advice about business energy contracts and how to avoid expensive contract rollovers. For further information visit www.energyadviceline.org.uk