Fracking is propping up the US economy

No wonder the UK wants a piece.

Rumours of America's death as the world's predominant economic power, to paraphrase Mark Twain, have been greatly exaggerated. Indeed, it now appears that Uncle Sam's hegemony seems set to continue for the foreseeable future. The Chinese dragon, which has for years been predicted to outperform the US eagle and assume the mantle of undisputed economic superpower, seems to have slowed its fiery progress and receded into its cave somewhat. The principal reason for this geo-political shift is largely driven by the USA’s current epoch-defining energy boom, courtesy of the discovery of huge shale gas reserves and the advent of fracking technology.

Fracking, the process of blasting shale gas from rock, is already revolutionising US energy capability and providing a shot in the arm for an economy that only a few years ago was wallowing in a deep recession brought about by the subprime mortgage collapse. The USA was a net importer of gas prior to shale coming to the rescue - now, in a remarkable volte face, it is a net exporter and has the power to drive the US economy into a new era of prosperity. This is not hyperbole; this is the technological breakthrough in energy of this generation and has already started to rebalance the global economic system. With cheap liquefied gas driving brent crude prices down in the US, the economy is no longer as dependent on the OPEC countries’ output and price controls. As the US returns to being self-sufficient, fuel is becoming cheaper and consumer spending is on the rise. The US has got more than 10,000 fracking wells opening up each year and their gas prices are three-and-a-half times lower than in the UK.

Clearly fracking has come at the right time for the US, as the country was beginning to recover it then received a huge boost from shale. As the US economy recovers and returns to growth, the knock-on effect for the rest of the world will be palpable. Global oil prices should fall, particularly good news for countries such as Russia, whose economy is driven by oil production and consumption. In short, prosperity is slowly returning to the economic behemoth and will continue to grow as the shale revolution fuels the US economy. This is happening at a time when the much vaunted rise of the BRIC countries - China in particular - is beginning to slow somewhat in the face of a declining export market, poor interest rates, closed financial markets and ever growing labour and manufacturing costs causing developed countries to repatriate certain higher-end manufacturing services.

It is no wonder that countries like the UK want to take advantage of fracking technology, on the basis that if the UK only sees a small percentage of the impact that shale gas has had in the US, there should be lower energy prices in the UK and greater household wealth. The American energy boom narrative is however a singular one and something that small countries such as the UK would do well not to ape too closely. The US has huge tracts of hinterland devoted to mining for shale gas - the majority of shale in the UK will have to be extracted in and around urban areas, so there is simply not the room for a wholesale energy revolution. Also, shale gas is a finite resource, so even the US will likely only benefit from this cheap energy source for the next 20-25 years.

What is critical for the UK and other major European economies is to continue prioritising research and development into alternative renewable energy technology, an area that the UK already leads in terms of innovation. Perhaps then the UK can find its own shale revolution using renewable, clean energy technology.

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Co-CEO of DLA Piper

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Like it or hate it, it doesn't matter: Brexit is happening, and we've got to make a success of it

It's time to stop complaining and start campaigning, says Stella Creasy.

A shortage of Marmite, arguments over exporting jam and angry Belgians. And that’s just this month.  As the Canadian trade deal stalls, and the government decides which cottage industry its will pick next as saviour for the nation, the British people are still no clearer getting an answer to what Brexit actually means. And they are also no clearer as to how they can have a say in how that question is answered.

To date there have been three stages to Brexit. The first was ideological: an ever-rising euroscepticism, rooted in a feeling that the costs the compromises working with others require were not comparable to the benefits. It oozed out, almost unnoticed, from its dormant home deep in the Labour left and the Tory right, stoked by Ukip to devastating effect.

The second stage was the campaign of that referendum itself: a focus on immigration over-riding a wider debate about free trade, and underpinned by the tempting and vague claim that, in an unstable, unfair world, control could be taken back. With any deal dependent on the agreement of twenty eight other countries, it has already proved a hollow victory.

For the last few months, these consequences of these two stages have dominated discussion, generating heat, but not light about what happens next. Neither has anything helped to bring back together those who feel their lives are increasingly at the mercy of a political and economic elite and those who fear Britain is retreating from being a world leader to a back water.

Little wonder the analogy most commonly and easily reached for by commentators has been that of a divorce. They speculate our coming separation from our EU partners is going to be messy, combative and rancorous. Trash talk from some - including those in charge of negotiating -  further feeds this perception. That’s why it is time for all sides to push onto Brexit part three: the practical stage. How and when is it actually going to happen?

A more constructive framework to use than marriage is one of a changing business, rather than a changing relationship. Whatever the solid economic benefits of EU membership, the British people decided the social and democratic costs had become too great. So now we must adapt.

Brexit should be as much about innovating in what we make and create as it is about seeking to renew our trading deals with the world. New products must be sought alongside new markets. This doesn’t have to mean cutting corners or cutting jobs, but it does mean being prepared to learn new skills and invest in helping those in industries that are struggling to make this leap to move on. The UK has an incredible and varied set of services and products to offer the world, but will need to focus on what we do well and uniquely here to thrive. This is easier said than done, but can also offer hope. Specialising and skilling up also means we can resist those who want us to jettison hard-won environmental and social protections as an alternative. 

Most accept such a transition will take time. But what is contested is that it will require openness. However, handing the public a done deal - however well mediated - will do little to address the division within our country. Ensuring the best deal in a way that can garner the public support it needs to work requires strong feedback channels. That is why transparency about the government's plans for Brexit is so important. Of course, a balance needs to be struck with the need to protect negotiating positions, but scrutiny by parliament- and by extension the public- will be vital. With so many differing factors at stake and choices to be made, MPs have to be able and willing to bring their constituents into the discussion not just about what Brexit actually entails, but also what kind of country Britain will be during and after the result - and their role in making it happen. 

Those who want to claim the engagement of parliament and the public undermines the referendum result are still in stages one and two of this debate, looking for someone to blame for past injustices, not building a better future for all. Our Marmite may be safe for the moment, but Brexit can’t remain a love it or hate it phenomenon. It’s time for everyone to get practical.