It's a fracking bonanza and even the UK Treasury gets the point
There could be 1,300trn cubic feet of gas in northern England alone. Ten percent of that could meet Britain’s needs for more than four decades
Every so often, and if you listen very, very, carefully, you will hear what resembles a sensible policy coming out from the Treasury. Previously, a squeak of sensibility had been heard when it realised that it may actually be losing money from personal taxation and it lowered the rate by a whole five percentage points.
And it is doing it again and this time we can sit back with some popcorn and watch the show as the greens get their hemp knickers in a twist. Georgy boy has announced that a certain portion of income from each shale gas ‘pad’, or production site, will receive an effective tax rate of 30 percent rather than 62 percent.
This could be great news for energy provision in this country that has criminally been neglected by various governments for so long due to their being wooed by various vested interests in both regular and green energy. But finally, someone somewhere has worked it out that there is no point putting in the various corporate tax reforms that Cameron boasts about if the damn country can only work during daylight hours anyway.
Last month, the British Geological Survey said there could be 1,300trn cubic feet of gas in northern England alone. Ten percent of that could meet Britain’s needs for more than four decades.
As a result, bills should go down as supply and demand takes effect – although the supply and demand that current energy producers define as supply and demand is more akin to ‘we’ll supply, and then demand whatever we like off the consumer because they have nowhere else to go’.
So, treat price cut promises with a pinch of salt at the moment – or until someone actually takes consumers’ complaints about an energy corporate cartel seriously for a change. Anyway, in these days of greenwash, see energy and fuel as a bit of a cash cow for the government.
I mean to say, of course, an efficient and purely by accident profitable piece of nudging that saw the Treasury reap in £26.2bn in fuel duties, £0.7bn in climate change levies, £2.2bn from petroleum duties and £7.3bn from UK oil and gas in the last year – and that’s with sliding yields from the North Sea.
So the actual idea of the government realizing that if a company has a bit more of its own cash to play with it may, perhaps, put some of that money back into an industry, has to be welcomed as better late than never. And there is also the potential economic benefit locally.
A Cuadrilla-commissioned report by Deloitte says shale gas in the Bowland area could generate £580m of tax revenue a year and reduce gas import needs by 14 percent by 2020, as well as supporting up to 23,600 jobs.
Now, granted, Cuadrilla has a vested interest in all this but these are points that should seriously be considered in what is best for our country, In addition, yes there are concerns about the environmental impact of fracking and these concerns should of course be examined, but properly examined. Not the typical greenist way of exclusion, but examination on the basis of scientific principle.
All you yoghurt weavers know scientific principle don’t you? If you don’t, then go away and find a scientist to tell you about the principle of theory and evidence, not belief and faith then come back and explain to me why some of your lot even insist that we should not even be putting test fields in and testing and examining the effects of fracking – you know collecting evidence?
Again according to Cuardilla, in response to fears about industrialization through fracking, 100 drilling sites of two hectares each should be “more than adequate” to extract 20 tcf of gas -- occupying “a total surface footprint of 2km² across a licence area of 1,200km²”.
Now, it could be that the concerns are real, the fears are genuine and the environmental impact of fracking are understated and the economic benefits are overstated, but until we have all the evidence, we have to consider all options. Just as a point of principle, it is fantastic that someone somewhere in the Treasury is finally getting it; finally realizing that just taxing to high heaven simply doesn’t work.
Now, if we could only get him working on our income taxes as well, that would be fantastic.
Simon Miller is a Contributing Editor to the Commentator
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