MYTH #2: DEBUNKED! “Fracking will lower energy prices.”
Link from FFR http://frackfreeryedale.org/myth2energyprices/
Well clearly FFR have not filled up their expensive 4X4 cars in the last few months, as prices have dropped from about £1.35 a litre to around £1.00. Although the bulk of the cost in the UK is tax, the price of oil hovers around the $30 a barrel mark, rather than the $100 plus value it had a short time ago. So much for PEAK OIL! This myth that FFR so cheerfully presents is out of date! One thing is clear, go back 3 years (when this myth was proposed) and everyone was sure that oil would continually rise in value, as resources diminished. In the current climate, this is a mythical myth!
There are many reasons for this price drop, one being the Saudis pumping huge amounts of oil, trying to put the US fracking industry out of business. There is also lack of confidence in the world markets, and stock market uncertainty. No-one however seriously disputes that one of the main factors is the US fracking boom, both in oil and gas. For the first time for decades, the US is self sufficient in hydrocarbons, and no longer needs the Middle East. It is now exporting hydrocarbons, some to to the UK. The world is awash with hydrocarbons!
Gas is more difficult to transport than oil, but the prices do track each other. INEOS will shortly be importing fracked ethane from the US to provide an economical feedstock for its Grangemouth chemical plant. They would prefer to use UK shale gas and long term need that to make Grangemouth viable. This link shows that from the end of 2013, the wholesale price of UK gas has more than halved. So fracking may not be the only reason why energy prices have dropped, but it is one of the major factors.
A summary of the decline in price can be seen here.
See what the US congress think of this
Boom and Bust’ has long plagued markets everywhere, and so falling drilling rates in the US will lead to less production, and a higher price in the future. However, drilling technology advances have meant that hydrocarbons can be produced cheaply.
What we can certainly say is that US fracking has made hydrocarbons cheaper, whatever FFR think.
Click here for next debunking, 'History of Fracking'.