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Fracking incentives ‘pathetic’ and ‘insulting’, Tory MP warns

13 January 2014

13 January 2014

Many plaudits this morning for ministers such as Michael Fallon who have catalysed the government’s push ahead with fracking. The only question, though, is whether enthusiasm in Whitehall will translate into enthusiasm in local communities. Ministers are pointing to a change in the incentives for communities which means they can now keep 100 per cent of business rates from extraction sites. But it certainly hasn’t impressed Ben Wallace, the Tory MP for Wyre and Preston North, who is a vocal spokesman for the group of MPs whose constituencies sit on the Bowland Shale. Wallace tells me:

‘What they are offering us today – an extra £850,000 of business rates is pathetic, insulting. The Treasury should take a little less and we could have a little bit more. These are crumbs from the Treasury table.’

Now, naturally, an MP is going to make as much noise as possible about getting a good deal for their constituents. But the question in this case is whether that MP’s constituents are going to see the incentives confirmed today as sufficient to accept fracking in their areas. Wallace thinks not, saying:

‘They don’t hold all the cards, this is not offshore gas, the mineral rights authorities hold the cards and without support this will be a long hard road.’

Ministers and aides insist that they can look again in future at fracking incentives if they prove to be insufficient. But the MPs who represent Bowland shale constituencies have been campaigning on this for long enough for their position to be clear, and their constituencies are already in many cases far more comfortable with the idea of industry than other areas of the country with shale deposits. If Wallace is right and his area is sluggish to accept fracking, then there doesn’t seem to be a great deal of hope for the rest of the country.


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  • David Booth.

    I for one am fed up of paying excessive energy prices in order to placate the feelings of so called self promoted environmentalist who let’s face it will not be happy until they condemn the UK to a Stone Age existence.
    Whilst I was freezing my balls off the so called “Eco Warriors” on that ship trapped in the Antarctic ice were being wizzed about on that most expensive and fuel inefficient form of transport the helicopter in order to be rescued from their own foolishness.
    If it was up to me I would have left them there until the ice did indeed melt.
    Enough is enough.

    • Daniel Maris

      Grow up and examine the evidence. The evidence so far is not that UK fracked gas will be incredibly cheap. Blame the government if you like (who want to milk it for all it’s worth) but don’t blame the green energy movement.

      • David Booth.

        Using such terms as “Grow up” is not much of an argument. Are you against the extraction of this gas or against the Government taxing it?

        • Daniel Maris

          Sorry – I didn’t think what was a very adult analysis.

          A. There are virtually no green energy enthusiasts who wish to “condemn us to a Stone Age existence” – whatever that might mean (read up on the Stone Age – people were actually reasonably health compared with most of history).

          B. The Arctic Eco Warriors have a reasonable point to make about not destroying the Arctic environment in pursuit of carbon riches.

          • http://ajbrenchley.com/namaskar Swanky

            A: Don’t make me laugh.

            B: Don’t make me laugh.

            • Daniel Maris

              And they say irony is lost on Americans. Just a note on pronunciation – it’s: Don’t make me laaaarrrrfuh.

              • http://ajbrenchley.com/namaskar Swanky

                Hi Dan. Or is it always Daniel?

          • David Booth.

            Life in the Stone Age was nasty, brutish and short (apol to Thomas Hobbes) hardly a life I would aspire to.
            The “Eco Fools” I was referring to are/were in the Antarctic or as my old geography teacher would say “Tuther end lad, tuther end.”
            I console myself with the thought that when the lights start to go out our thinking will start to clarify.

  • Daniel Maris

    Some of us did try to tell us this wasn’t going to be an American style bonanza…but you didn’t want to hear.

    • Owen_Morgan

      There is no geological reason for shale extraction not to be highly beneficial for the British economy. The obstructions to that are rent-a-moron greenies, ready to claim residency in any square inch of the UK at a moment’s notice, an ever-sympathetic broadcaster (the beebyanka, natch) and a Danish eu commissioner who is simultaneously so idiotic and so venal that she belongs in “Gulliver’s Travels”.

  • Colonel Mustard

    This seems to be a unedifying bun fight over the money to be spun from schemes by the frackers, the government and local councils. The people whose interests the last two are supposed to represent seem to be completely missing from the considerations. The first responsibility of the government and local councils should be securing cheaper energy for the people not trying to exploit more price increasing tax money out of the projects to waste on expanding the bloated state or drop-in centres (and other vanities) for the few funded by the increased council taxes of the many.

    It just goes to show how far government and local councils have travelled in becoming self-sustaining and aggrandising corporate entities that exist for their own benefit.

    • dalai guevara

      And how would a local councillor or whoever ‘aggrandise’ himself exactly?
      Are you suggesting they were on someone’s pay roll? What other ‘incentive’ could there be?

      • Colonel Mustard

        Council vs councillor. The clue is in the words.

        I wrote COUNCILS.

        You introduced COUNCILLOR. So you tell me.

        Now let’s look at ‘aggrandise’, a verb:-

        1. to increase the power, wealth, prestige, scope, etc, of
        2. to cause (something) to seem greater; magnify; exaggerate

        No charge for this English lesson.

        • dalai guevara

          Communally-owned energy concerns are neither linked to councillors nor councils. My pond is larger than yours, sir.

          • Colonel Mustard

            I really do wonder about your tendency to both read and write into someone else’s comment so much that is not there. Which part of business rates as mentioned in the article did you fail to understand? They are collected centrally and then distributed to LOCAL AUTHORITIES, e.g. COUNCILS.

            This whole issue is about a wrangle between central government and local councils as to who gets their hands on the business rates.

            • dalai guevara

              I am not suggesting ‘business rates’ were the answer. That is why none of my comments refer to councils as the answer. Councils are not the answer!
              Communally-owned energy ≠ council controlled energy.
              We need to think about taking this one step further.

              • Colonel Mustard

                Oh for goodness sake, If you want to promote your communally owned energy line make your own comment. Don’t tag it on a comment of mine that has nothing to do with that. I was commenting on what is happening not on what should be happening.

                • dalai guevara

                  Colonel, did your lunch not go down well today?
                  Let me rephrase what caused reflux then, shall I.

                  Councils/councillors on councils, people that make up COUNCILS i.e. COUNCILLORS are corrupt then are they?

                  nb. your comment was hardly worth ‘tagging’ was it?

  • madasafish

    The fraccing argument has largely been lost before its started.

    Fraccing near Blackpool and affecting buildings -as the first major wells – was and is insanity as PR.

    Business rates as a bribe is going to make no impact of communities and people – and it is PEOPLE the fraccing inductry needs to convince.

    Mr Fallon was very good on TV. BUT too little too late.

    25% of all new tax revenues for the first two years falling to 5% thereafter – paid as a rebate to all local ratepayers would convince loads of people to agree – and to object to out of town protestors . It would cost very little (as revenues are low in the first years until output rises) but an upfront rates rebate would be a strong positive incentive.

    Frankly giving money to councils is going to enthuse no-one.

    It’s motherhood, apple pie and common sense. All sadly lacking.

    • Alexsandr

      yes. give the money to council tax payers, not the councils. but define ‘local’ as I have said below some local authority areas are massive. And what about fracking near county borders. The benefit needs to be for those near the sites.

      • Makroon

        That is fair enough, but then, instead of a few random local greenie malcontent protesters, you would have the full obstructionist weight of the council jobsworths.

  • Tom Tom

    Can’t they get some beads and trinkets to buy the natives as so often in British colonial history ? Surely the empire was built on getting access to land and minerals for a few trinkets and then siphoning the money into The City of London ?

    • Fergus Pickering

      But the trinket were what the fuzzy-wuzzies wanted. We must mke sure that is still the case with the modern peasants. Perhaps we could give them big tellies.

      • Daniel Maris

        Lottery cards. They’ve got the big tellies already. With lottery cards they can just spend the whole day on their sofas happily scratching cards when not scratching their bellies.

        • Fergus Pickering

          Nice one, Daniel.

          • Daniel Maris

            I have my misanthropic moments.

        • Kennybhoy

          Cruel but funny!

    • Kennybhoy

      Who do you shill for?

  • dalai guevara

    We are slowly but surely beginning to understand the simple business rate carrot will not be worth the stick. Again, communal energy concerns as seen in our neighbourhood in Anglia but especially Saxony and noting how they work would just be outright insane to ignore. Shale gas is the ticket.

    • Daniel Maris

      Yes, give ownership of the mineral rights to local people. Good idea. And provide a legal framework for setting up co-operatives to exploit those rights.

      • dalai guevara

        I am beginning to wonder whether the dissolution of the Act of Union would in any way accelerate that process.

        • Daniel Maris

          Well it would certainly accelerate it north of the border I think.

  • Tony_E

    The incentive for Fracking should be a simple one – cheap energy. Unfortunately the government has queered its own pitch on this one.

    We have North Sea Oil – but what good has that done the consumer of petrol/diesel and all the products made from oils or transported using them? Not a lot – the government takes a lot of revenue and therefore prices are still way too high, stifling business and consumer alike.

    With fracking, now the game is on to provide incentives, all of which will be paid for by the consumers of energy. The more incentives, the less the effect of new gas reserves on the wider economy.

    In the end, I suspect that Fracking, lie other natural resources, will just be another cash cow for government which will be fed into re-election schemes and the pork barrel that is expansionist government spending. The consumer of energy will benefit little if at all.

    • AnotherDave

      UKIP are advocating using revenues from fracking to build a Sovereign Wealth Fund.

      http://www.ukip.org/newsroom/news/894-we-announce-plan-for-sovereign-wealth-fund-for-shale-gas-revenues

      • Alexsandr

        how about the people in fracking areas get a council tax reduction. That will get them voting for it. Instead we will see the money wasted on community knitting workshops and the like.

      • Tony_E

        Yes, but they aren’t going to win an election.

      • Makroon

        Typical UKIP quackery. I guess they can overlook our £1.3T debt in favour of yet another stunt. Nigel Farage heavily disguised as Wedgewood Benn.

      • Daniel Maris

        The idea of ring fencing revenues for a bit of saving should certainly not be dismissed out of hand. We need to build in some sort of discipline into our fiscal arrangements.

    • Makroon

      If Balls ever gets his hands on it, your worst nightmares will seem like sweet dreams.

    • El_Sid

      But it’s not going to be cheap energy, not if you’re only getting 2-3bcf from a well costing over £10m. It’s energy that’s not at risk of being blown up in the Gulf and energy security is good, but it’s not cheap energy.

      Gas prices are hard to compare as they are location and season-specific, but to give you an idea, horizontal drilling really got going in the Barnett Shale in 2003/4 – the main US benchmark started 2003 at $4.93/MMBtu, it’s now around $4.50. And even now pure shale gas is still not very economic, the pipelines are being filled with waste gas from oil-rich shales like the Eagle Ford. It’s the oil price that’s driving shale development, and it’s still not clear how oily the British shales are. The reason that Cuadrilla are drilling where they are is that end of the Bowland is oily, but it’s probably more gassy further south and east.

      • Daniel Maris

        Thanks for what sounds like a credible update El Sid! Thanks. I hadn’t quite appreciated the oily/gassy distinction and its importance. Certainly deserves some further investigation as I have never heard that mentioned either by pro or anti frackers.

        • El_Sid

          It’s a critical distinction when you’re making an investment decision, but it’s maybe not terribly relevant to the national debate on “should we, shouldn’t we?” Each shale is different, and assessing their oiliness is one reason why we need to get cracking on trial wells to get a proper idea of what we’ve got. But to give you an idea, there’s open-source data suggesting that oily shales will break even at $4/MMBtu, and dry gas shales somewhere around $6-7/MMBtu, although some may need $10/MMBtu.

          By comparison, the UK average wholesale price was 68p/therm last year, so a bit over $11/MMBtu. So there’s scope for our prices to come down but the reality is that it will always cost more to operate onshore wells in the UK than the £5m or so a well costs in an empty desert in the US. It’s fine if your £10m UK well yields twice as much gas, the odds are that won’t happen. Again, we won’t know unless we drill some test wells.

          It’s also worth noting that the US is a big place and their gas prices are not uniform. There’s a particular problem in New England which has had a dash for gas in recent years without a matching investment in pipeline capacity – despite the headline benchmark (in Louisiana) being $4-4.50/MMBtu, New Englanders were paying nearly $15/MMBtu in December, and spiked over $20/MMBtu during the polar vortex the other day. Last winter was milder, and the December price was about $10/MMBtu. Tennessee is also a blackspot. So it’s hard to generalise about prices, they vary a lot for reasons other than shale production.

          • Daniel Maris

            Thanks once again. A very illuminating analysis. The Spectator should have you write an article explaining this all, rather than just keep on publishing “drum-banging” articles which do little to explain the economics behind the exploration.

  • Alex

    MPs are running scared of the relentless anti-fracking campaign by the BBC.
    So basically the UK government is forcing every UK household to pay for the organisation that is holding back the only policy that will keep the lights on at prices we can all afford.
    You couldn’t make it up.

    • HookesLaw

      You make a half decent point.

      But it is also tory MPs running scared and more happily resorting to blackmail rather than being sane and honest and positiuve in speaking up for a sensible policy which will be good for their constituents and good for the nation.
      There is no need to make it up, thick conservative backbenchers behave like this all the time.

    • Makroon

      Spot on. They refuse to hold the BBC to it’s charter and dispense with the disgusting Patten, so we all have to bear the consequences.

    • The Laughing Cavalier

      Note, the BBC always refers to fracking as “controversial”. This is usually followed by a statement from Caroline Lucas which is allowed to go unchallenged.

      • Daniel Maris

        Well it is and will continue to be controversial to everyone who has a site located near them on this crowded island (and most of the shale gas appears to be in more populated areas). That’s just a fact of life. Are you claiming no Tory MP is going to come out and oppose fracking in his/her constituency?

    • Daniel Maris

      That’s absurd. I haven’t seen any relentless anti-fracking campaign from the BBC. They have played it evenhandedly I would say. Quite different on AGW/climate change and mass immigration but not on fracking.

  • HookesLaw

    Mr Wallace seems an outstanding example of the thick tory backbencher.
    Ownership of land does not give you rights tom ownership of the minerals underneath it. The government own that.

    • Rhoda Klapp8

      Under freehold, you do not actually own the land. You hold an estate in fee simple. The mineral rights are one illustration of that.

      I wonder how it would affect fracking if landowners did own the gas and had the right to develop it.

      • HookesLaw

        With freehold you effectively own the land – you do not own the rights to whats under it. This is the same I guess in any country in the world no matter what the land ownership rules

        I suspect if we did own the rights then there would be no debate we would be pumping loads of gas already.

        • El_Sid

          You guess wrong – the US is a prominent example of freeholders owning everything under the land, and it’s one reason why their onshore industry is so active. A notorious example is the Piloncillo Ranch, whose shale rights went for a billion dollars up front, plus royalties.

          • Tom Tom

            Think of the Hunt Brothers in Texas and the Bass Brothers

          • Daniel Maris

            Also, they have huge farms and ranches, where – effectively – you have only to worry about the interests of one owner. Makes everything much much simpler.

        • Tom Tom

          ALL land in England belongs to The Crown. The surface freehold rights are transferable between freeholders under the protection of The Crown but neither air rights nor mineral rights

      • The Laughing Cavalier

        If landowners were given back mineral rights there would be no energy shortage.

        • Tom Tom

          When aristocrats grew rich on coal rights in the 18th Century you mean ?

    • Makroon

      Wallace is in an area thick with Labour sinecure MPs, and he has an election to fight. What would you do, echo every word of Cameron’s green buffoonery ? (e.g. ‘the recent storms are the result of global warming’ – and that was just an unprovoked aside – the idiot just can’t keep his lip buttoned).

  • sir_graphus

    If we want to ensure we completely waste any money arising from fracking, then local councils are the body to do it.

    • HookesLaw

      Well you too make a good point. The govt are saying that councils will keep all the business rates not the normal 50% associated with fracking – well how can an MP complain at that – it seems eminently more than fair and reasonable.
      On top of which the BBC say that Fallon has said councils could benefit by up to “£10m per wellhead” if shale gas was successfully extracted in their communities, through the 1% levy on revenues.
      Yet still a tory MP says its not good enough??

      • Alexsandr

        but as graphus says, what will the councils do with the extra cash. they should use it to cut council tax for residential properties. Not waste it on diversity co-ordinators and community initiatives. and the CT rebate should be graduated on the distance from your property to the fracking site.

        • HookesLaw

          Like I said – he made a good point. But you immediately descend into silliness with bringing in distances.
          Despite the usual caveats about local authorities I do not see any problems with allocating them funds which can for instance be used on schemes to counter disruption and not frittered away. I am not sure I go with simply discounting rates which can be dressed up as political success for the incumbent and possibly inept council. Equally I am not in favour of an alternative bureaucracy to disburse any funds.

          • Alexsandr

            its not silly. My local district covers a huge area, 377 sq miles. So why should areas miles from the fracking site get benefit from it? And the counties are even bigger.

    • Count Dooku

      I agree with the business rates incentive but the solution to this should be simple. 5% of revenues in cash should go to the people living in the relevant local authority. Nothing like cash in hand to ease one’s conscience.

  • drydamol1

    BROKEN BRITISH POLITICS – CAMERON STARVES COUNCILS OF REVENUE

    Can Cameron get any Lower in his quest to get his own way
    .He has starved Councils throughout the UK of Revenues forcing even more cuts
    on them but gives them an option .Rise Council Tax or award Fracking Contracts
    in your areas and keep 100% of the Business Tax instead of the 50% .

    The usual Lies & Deceit are now probably wearing a
    little thin so he is resorting to Bribery .

    What makes people lose all sense of moral direction in
    Favour of being in Government – obviously its not dedication to work otherwise
    they would be paid in washers .

    How is it classed as a Democratic decision made in
    Parliament when MP’s are coerced to vote which way their Party says by Whips
    .We need a new term to describe our Political System and it is certainly not
    Democracy .

    The normal Rhetoric is being spilled out concerning
    Fracking similar to North Sea Gas ,creation of more Jobs ,Lower Energy Costs .The
    Billions created by North Sea Gas did not see the cost greatly reduced or the
    benefit of the extra revenue trickle down to the Taxpayer and every
    appliance had to be converted .Cameron won’t even dredge rivers to stop
    flooding ,wait till Fracking starts .

    Another Gravy Train Damaging Exercise to our detriment
    .The subsidence caused in Blackpool by Fracking is an example of what is to
    come ,all in the name of Greed .

    http://brokenbritishpolitics.simplesite.com

    • HookesLaw

      Yet another hysteric.

      • monty61

        You mean Yet Another Hysteric. (Are Capitals The New Green Ink?)

        • HookesLaw

          No They Are Not !!!

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