Shale gas could frack up our manufacturing

Fracking won't help our industrial base, if the Dutch disease is anything to go by.

Among the many extravagant claims made by supporters of fracking, perhaps the most absurd is that it will lead to a renaissance in British manufacturing. George Osborne picked up this theme last week when he argued that cheap energy was leading manufacturers to return to the US and he wanted to see this happen in Britain. A revival in the fortunes of our hard-pressed industrial regions would be warmly welcome, but sadly fracking will not deliver this. Even if all the major obstacles to extracting large amounts of UK shale gas could be overcome, our manufacturers are unlikely to benefit from much cheaper gas. To make matters worse, they could even suffer a big loss of competitiveness, as they did in the late 1970s when the discovery of North Sea oil pushed up the value of the pound.

The obstacles to major shale gas production in the UK are well known. To start with there are uncertainties about the geology. The estimate of UK shale gas reserves in the north of England was recently revised up substantially to 1300 trillion cubic feet and it is often suggested, based on US experience, that it might be feasible to extract 10 per cent of these reserves. Yet given that there are differences in the geology between the US and UK, no-one really knows whether it will be economically viable to extract anything like this volume of gas.

Even if the economics of extraction turned out to be viable, there are a multitude of environmental concerns and substantial political opposition. Unlike the US, where fracking can take place in the wilderness, we live in a crowded island. Developing our shale gas reserves will inevitably bring substantial local and national opposition that will make it much harder for the industry to take off in a big way.

But as many commentators have already pointed out, even if these substantial obstacles could be overcome, it may not mean cheap gas for our manufacturers. Unlike the US which has little capacity to export its newly found gas reserves, the UK is heavily integrated into the European energy market and our gas prices are set at the European level. Extra gas production from UK shale gas is unlikely to be large enough to lead to major reductions in European gas prices.

But what has been overlooked is that the discovery of a natural resource should lead to an appreciation of the exchange rate, which makes the manufacturing sector less competitive. The most celebrated example of this happened in the Netherlands after the discovery of a large gas field in 1959 which led to the term the “Dutch disease”.

There is also an example closer to home when the UK made the discovery of North Sea oil in the 1970s and sterling became a "petro-currency". Interestingly, if the claims of proponents of fracking are to be believed, the scale of shale gas reserves in the UK could be of a similar magnitude to the discovery of North Sea oil. If 10 per cent of the estimated northern shale gas reserves were accessible, this would be equivalent to around 3250 million tonnes of oil which is almost exactly the same as UK offshore oil production since 1975.

And the precedents from when the UK discovered it had large offshore oil reserves in the 1970s are hardly encouraging. Despite an almost perpetual economic crisis, the real effective exchange rate of sterling rose by nearly 30 per cent in the six years after the first North Sea oil was landed in 1975. Over this period gross output of UK manufacturing fell by over 22 per cent and unemployment rose sharply.

That’s not to say that no-one benefits from exploiting natural resources. The companies extracting shale gas could take on more workers and may generate higher profits for their owners. There may also be additional tax revenues for the government if they are not squandered on excessive tax breaks to stimulate the industry in the first place. But the beneficiaries will not include UK manufacturers. Even if one ignores all the practical, political and environmental obstacles to exploiting our shale gas, the argument that it will lead to a renaissance in UK manufacturing does not stack up. It is unlikely to significantly reduce our energy prices and is more likely to push up sterling and erode the competitive position of our manufacturing firms.

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Fake news sells because people want it to be true

The rise of bullshit, from George Orwell to Donald Trump.

When is a lie not a lie? Recently, the Daily Telegraph reported that university students had demanded that “philosophers such as Plato and Kant” be “removed from [the] syllabus because they are white”. Other outlets followed suit, wringing their hands over the censoriousness of today’s uninquiring young minds. The article generated an extraordinary amount of consternation click bait. Angry responses were written and hot takes were quick-fried and served up by outlets anxious  to join the dinner rush of  ad-friendly disapproval.

It’s a story that could have been designed to press every outrage button of the political-correctness-gone-mad brigade. It has students trying to ban things, an apparent lack of respect for independent thought and reverse racism. It seemed too good to be true.

And it was. In reality, what happened was far less interesting: the student union of the School of Oriental and African Studies (Soas) at the University of London had proposed that “the majority of philosophers on our courses” be from Asia and Africa, and that the Western greats be approached from a “critical standpoint”. Some might consider this a reasonable request, given that critical analysis is a component of most philosophy courses, and Soas has a long tradition of promoting the study of the global South. Yet a story about students declaring Kant irrelevant allows the Telegraph to despair for the youth of today and permits advertisers to profit from that despair.

People didn’t start pumping out this stuff because they decided to abandon journalistic ethics. They did so because such principles are hugely expensive and a hard sell. Even those of us who create and consume news can forget that the news is a commodity – a commodity with a business model behind it, subsidised by advertising. Rigorous, investigative, nuanced content, the sort that pays attention to objective facts and fosters serious public debate, is expensive to create. Talk, however, is cheap.

Fake news sells because fake news is what people want to be true. Fake news generates clicks because people click on things that they want to believe. Clicks lead to ad revenue, and ad revenue is currently all that is sustaining a media industry in crisis. Journalism is casting about for new funding models as if for handholds on a sheer cliff. This explains a great deal about the position in which we find ourselves as citizens in this toxic public sphere.

What has this got to do with Donald Trump? A great deal. This sticky, addictive spread of fake news has fostered a climate of furious, fact-free reaction.

Press outlets give millions of dollars of free coverage to Trump without him having to send out a single press release. The reality TV star is the small-fingered god of good copy. The stories write themselves. Now, the stories are about the threat to the future of journalism from the man who has just entered the Oval Office.

Trump’s first press conference in six months, held at Trump Tower in New York on 11 January, was – by any measure – extraordinary. He did not merely refuse to answer questions about unverified allegations that he had been “cultivated” by Russia. He lost his temper spectacularly with the assembled press, declaring: “You’re fake news! And you’re fake news!”

Trump did not mean that the journalists were lying. His attitude to the press is straight from the Kremlin’s playbook: rather than refute individual accusations, he attempts to discredit the notion of truth in journalism. The free press is a check on power, and Trump likes his power unchecked.

Writing in the Guardian in 2015, Peter Pomarantsev noted of Putin’s propaganda strategy that “these efforts constitute a kind of linguistic sabotage of the infrastructure of reason: if the very possibility of rational argument is submerged in a fog of uncertainty, there are no grounds for debate – and the public can be expected to decide that there is no point in trying to decide the winner, or even bothering to listen.”

If people lose trust in the media’s capacity to report facts, they begin to rely on what “feels” true, and the influence rests with whomever can capitalise on those feelings. Donald Trump and his team know this. Trump doesn’t tell it like it is. Instead, he tells it like it feels, and that’s far more effective.

Fake news – or “bullshit”, as the American philosopher Harry G Frankfurt termed it in a 2005 essay – has never been weaponised to this extent, but it is nothing new. George Orwell anticipated the trend in the 1930s, looking back on the Spanish Civil War. “The very concept of objective truth is fading out of the world,” he wrote. “Lies will pass into history . . . In Spain, for the first time, I saw newspaper reports which did not bear any relation to the facts, not even the relationship which is implied in an ordinary lie . . . In the past people deliberately lied, or they unconsciously coloured what they wrote, or they struggled after the truth, well knowing that they must make many mistakes; but in each case they believed that ‘facts’ existed and were more or less discoverable.”

This is the real danger of fake news, and it is compounded by a lingering assumption of good faith on the part of those who believe in journalistic principle. After all, it’s impossible to prove that a person intended to deceive, and that they didn’t believe at the time that what they said was true. Trump may believe in whatever “facts” he has decided are convenient that day. When he insists that he never mocked a disabled reporter, whatever video evidence may exist to the contrary, he may believe it. Is it, then, a lie?

Of course it’s a lie. People who have no respect for the concept of truth are still capable of lies. However, they are also capable of bullshit – bullshit being a register that rubbishes the entire notion of objective reality by deeming it irrelevant. The only possible response is to insist, and keep insisting, that the truth still means something.

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.

This article first appeared in the 19 January 2016 issue of the New Statesman, The Trump era