Should I invest in Hydraulic Fracturing?

by Philip Carr-Gomm

I predict that we will start to see other initiatives to stop the lunacy of fracking occurring within the next six weeks or so. The basic fact that it is uneconomical and that financiers are only interested in it because high-end deals in the early stages can nett people millions (through trading licences and share dealing) will become more widely known and the ‘shale bubble’ will burst (the world’s biggest fracking company posted a $6 billion loss, the CEO got $112.5 million pay-off – usual story!)

The game is to move really fast, so that like musical chairs, you don’t fall on your ass with fracking fluid on your face when the music stops. If you’re lucky you’ll have made a lot of money, unlucky and you can limp home with still the possibility of a million or so in bonuses. Who will lose? Only the people who put the money up for the projects – the banks and the UK taxpayer because Cameron offered tax breaks. A number of banks have now stated they will never invest in fracking – taking the UN warning on its environmental dangers seriously – and the shareholders at those banks who have invested, such as HSBC, will soon start asking embarrassing questions, and the funding will dry up.

Cameron risks making a fool of himself – he’s done that already by announcing that communities who accept fracking will receive a million pounds, only to be corrected by his team who had to tell us that he meant £100,000 – enough for a new pedestrian crossing to help cope with the 24/7 lorries that would thunder through the community. He’s made a fool of himself too by telling us that fracking will bring down gas prices, only to be contradicted by his own energy minister Ed Davey, and the economist Lord Stern.

All politicians take such risks, but he’s gone a step further: he has risked the darkness that lies at the heart of the UK government being exposed: the network of ‘old chums’ who will make a killing before the bubble bursts. Don’t believe me? See here, and look at Lord Browne’s role in government and the fracking industry. It’s all wonderfully symbolic – the explosions underground and the forcing out of stuff from deep down will happen at the political level not at the geological level. The current government will frack itself and discover next year that people won’t vote for them in the 2015 General Election unless they clean up their act and stand up for our countryside rather than trying to despoil it.