I don’t know what I think about Fracking. As a generally Green person, I am against it. It is the most expensive method of extracting oil from the ground, $115 a barrel compared to $10 per barrel from Iran and Saudi. It is hugely wasteful of water, itself a valuable resource.
But on the other hand, UK Fracking would mean less dependency on these Middle Eastern extractors and that has to be a good thing; we can’t criticise their awful human-rights records because we need their carbon. But things seem to be changing and the balance shifting. A week or so ago Obama finally vetoed the Trans-Alaska oil pipeline and then last week, Shell shelved their plans to develop a second tar sands mine in Alberta, Canada because of the costs involved.
All tar sands expoitation is incompatible of course with a 2C limit on future Global Warming. As is exploiting the Arctic for oil. In fact I have been reading a recent study that shows that if the world is serious about the 2C limit then we should leave the carbon in the ground. The fossil fuel reserves are three times as much as could ever be burned.
So which carbon should be left in the ground, unexploited? Cheap Iraqi oil? The political and social consequences of that are mind-boggling. Expensive Ukrainian coal? Cheap Chinese coal? Cheap Iranian gas? Expensive American Shale? Who decides? Well, arguably the market. The reason Shell has abandoned its plans for another tar mine in Alberta are entirely market-driven; they can’t make a profit from it in the present glut. Doesn’t matter about the Canadian economy or workers jobs to a giant like Shell. It seems reasonable to assume therefore that if Ukraine, for example, loses business opportunities because their international energy costs [home-grown coal] are too high, they will shut the mines. Thousands of jobs would be at risk.
Not the least interesting aspect of all this is the effect 2C will have upon company profits. If Exxon, Shell and BP aren’t extracting carbon, what will happen to their business model? What will happen to their profits? Will there be any profits? Will they bulldoze their way into the Arctic regardless, even if it means a world surplus?
Can anyone control Big Oil?