How I learned to stop worrying and love fracking

Friends of the Earth, the environmentalist group, might be feeling a bit betrayed this week.

Back in the 90s they loved Lord Deben – AKA John Gummer – calling him “the best environmental secretary we’ve ever had”.

He’s a committed green and investor in renewable energy. Even after he lost his post in 1997, he pushed green issues from the backbenches and was instrumental in passing the Climate Change Act of 2008. So he has more credibility than your average government cheerleader.

That’s why David Cameron made him the chairman of the government’s advisory body on climate change last year.

Thing is though, this week he weighed in on a controversial topic: fracking.

So what exactly did he say?

“It just isn’t true that fracking is going to destroy the environment and the world is going to come to an end if you frack… and yet to listen to some people on the green end, that’s what they say.”

He went on to say that fracking would give Britain a secure energy source without wrecking the environment.

It’s a familiar topic at The Right Side. Over the last few weeks there’s been a lot of debate over the pros and cons of the issue. I’d like to leave the subject behind for now, but not before going over what I’ve learned…

Your top three issues

Speaking as an investor and UK resident (one with young kids, to boot) I’m pretty much on the pro side of the debate too.

Don’t get me wrong, I’m concerned about environmental issues like many others. I mean, the last thing anyone wants to see is a catastrophe on our own doorstep.

Yet I’ve been quite surprised by how positive the feedback on this subject has been. I thought it would be much more controversial. You see, when an article generates a lot of response, it’s usually from readers who disagree with you. Basically, they write in to slate me (and I’m fine with that!). But that hasn’t been the case with fracking.

The more I read through reader comments, the more I think that the man on the street (or at least the average Right Side reader) has his finger on the pulse. Three issues came up again and again.

1) Any projects should be undertaken with the utmost of care and respect for the environment. Checks and balances must be in place.

2) Fracking should only happen as part of a sustainable energy policy. Fracking profits should be spent in part on renewable energy and energy saving measures.

3) We should regenerate business in old industrial areas which have suffered over recent decades.

And anyway, who is going to be the first to turn out the lights? And who wants to make the dreaded decision between ‘heat and eat’? Those are very real concerns amongst readers.

The cultural media blind spot

I think an elitist ‘cultural-media’ has emerged in the UK. What do I mean by that? I mean that much of the mainstream media supports the status quo. And I don’t think they represent the public.

Take, for example, the debate on immigration. For years, it was impossible to have a sensible debate on immigration because it was deemed undignified. That went on until UKIP forced the issue by themselves, without the media’s blessing. Now suddenly, all parties seem to be singing from the same populist hymn-sheet.

From what I can see, fracking strikes a similar chord. The cultural elite don’t even want to talk about it. You see plenty of stuff plastered over the media about the dangers of fracking – earthquakes, flames spouting from kitchen taps, talk of chemical cocktails pumped into the water supply. You know the stuff… it makes for a good read!

But among the rank and file, people seem much more open to rational debate. Many people see that in reality, there’s a lot be said for making the most of our naturally occurring fossil fuel.

I don’t see the ‘cultural media’ changing its opinion any time soon. But I suspect that ten years from now, today’s horror stories will be very much put in context.

And while the anti-fracking lobby remains so entrenched, it does at least offer early investors the chance to get in on theme that most investors choose to ignore. That’s the investment opportunity. For all the information you need to make that investment decision, click here.

Where to go from here

There are, of course, many reasons to tread carefully. In investment, there’s only one thing worse than being wrong… and that is, being right, but too soon!

In that sense, I’ve kicked off with quite a small exposure to the sector. The big oil majors are already muscling in on the action, so I had some exposure through them. I’ve also been looking at a couple of dedicated fracking companies. These boys could offer early bird investors a very healthy gain – but they’re risky!

I’ve also mentioned Wood Group before. It’s a Scottish oil services company that has been expanding its fracking technical base. As and when things kick off in the UK, they should be very well placed to pick up contracts.

For the moment, I’m starting off carefully. But it’ll sure be interesting to see how this game develops.

Former City fund manager comes forward with:

“My top UK fracking investments for 2014”

This year, shale gas – and the controversial drilling method known as ‘fracking’ – could go mainstream in Britain.

Huge amounts of wealth stand to be made if you make the right investment.

Find out what one expert is recommending you buy to take advantage here.

David Stevenson,
The Fleet Street Letter

The Fleet Street Letter is a regulated product issued by Fleet Street Publications Ltd. Your capital is at risk when you invest in shares, never risk more than you can afford to lose. Please seek independent financial advice if necessary. Customer services: 0207 633 3600.

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15 Responses

  1. 13/12/2013, Samm wrote

    As well as investing I do not want to invest in technology that will destroy the place where I live. What is the point?
    You can’t be that naive that you think the government and fracking industry will tell you the truth?!?!
    All you have to do is go to the USA where the industry has destroyed the local environment and see for yourself.
    This is because fracking opens up the division between geological strata in the Earth’s crust. Methane gas leaks upwards and seeps out at ground level, polluting the air. Gas leaks through into the water table and gets into our water supply. The process itself destabilises the Earth’s crust and causes Earthquakes.
    Whats not to understand?

    So you think the effect will be small?? Speak to the people in the USA. They will tell you the truth. The effect is not small. If it where not a problem no one would be making a fuss.

    The only thing the industry and government care about is the profits they will make. They do not care how much destruction to ordinary peoples lives they cause. They will be rich and can choose not to live in a fracking zone. The rest of us will have little choice.

  2. 13/12/2013, Michael G wrote

    Pleas Bengt, stop booting your kids, you could get sent to prison for that and you are not allowed to write articles from there.

  3. 13/12/2013, Warun Boofit wrote

    I would be inviting the drillers to come and frack in my back garden if I thought it might actually be profitable for me, keeping warm is an appealing prospect, I have not had the oil central heating on yet this winter as it costs too much to run. My problem with fracking in the UK is that so far I can see no evidence that it will be worth doing, I dont see any missed opportunity by not placing a punt at this early stage, energy explorers in the main crash and burn (the cash that is). I see UK frackers as being marginally less risky than AIM explorers looking for oil in the DRC, there are similarities in that they all spin a convincing story. In the unlikely event that UK fracking will work the only people to profit will be the investors, it will mean nothing to consumers and thats ok by me, good luck to the frackers but I will stick to less risky gambles like Coop bonds.

  4. 13/12/2013, 4caster wrote

    I am not a geologist, and will leave the safety of fracking to those who are. The British Geological Survey estimates between 23 and 65 trillion cubic metres of gas “in place” in the Bowland-Hodder formation, which extends from Liverpool to Scarborough to Loughborough, of which around 2.6% might be recoverable. So don’t get carried away by the idea of cheap and plentiful home-produced gas.
    I am however a meteorologist, and for over 30 years my main concern has been to limit global warming. If shale gas does become plentiful, its consumption would be incompatible with the commitments made by this country and others to reduce greenhouse gas emissions. The Government Chief Scientist has given shale gas a qualified welcome on the grounds that gas is less polluting than the coal it might replace. I am less optimistic, and would expect gas combustion to be additional to the coal combustion, which will continue to take place anyway.

  5. 13/12/2013, Tyler Durden wrote

    It’s a ponzi scheme, more BTUs have to be put in than you get out, you have to open up a new well every eighteen to twenty four months and it slurps through millions of gallons of water. There are vast areas of Texas literally without water. That would utterly devastate this country.

    I can’t believe people are buying into this propaganda. We reached peak oil in 2005, that’s it, nothing will change that, get over it.

  6. 14/12/2013, Sevo wrote

    Mixed feelings about this one, esp as it might happen in my backyard. Can’t help but feel that the UK needs more “home grown” energy and green isn’t meeting expectations currently.

    Concerning CO2 emissions. Would there not be some form of CO2 saving given that we would be importing less fuel from elsewhere? Surely it would cut down on transport emissions ect by having this at home. Those imported resources represent imported inflation also, another reason Georgie Os would love to frack…

    With regards to the actual efficacy of fracking as a process, more specialised people than me seem to think it profitable. Francis Gugen holds more than a 13% share in IGas, which I (optimistically) view as his personal faith in the tech!

  7. 14/12/2013, Warun Boofit wrote

    I agree Igas looks a good long term investment but I do not see it as an explorer, its an oil producer with a great business model concentrating on a profitable existing niche market who are also taking a relatively small punt on fracking. Nothing wrong with that and they are not betting the farm on it so if fracking does not prove viable for them they still have a business but the share price is leveraged by fracking sentiment right now so its volatile.

  8. 17/12/2013, cherrybrulee wrote

    Bengt, Im really tired of these Moneyweek emails which are continually pushing fracking at the investor and misinforming people.
    I love Britain and I love the countryside. I want to preserve the beauty of this country and am extremely concerned about the cocktail of carcinogens injected into the water supply, the earthquake risk, and using of too much water by industry.
    This could poison the environment on which we are trying to live and is worse than pointless form of short term investment.
    Not only that, the huge amount of energy taken to create shale gas cancels out using it so it does not create energy.
    I want to invest ETHICALLY and this continual pushing of ‘natural gas’ is turning me off Moneyweek.

  9. 18/12/2013, One of many wrote

    Bengt, this is starting to sound like propaganda – particularly now you are putting words into the mouths of your audience. If you really feel the average Right Side reader has his finger on the pulse then you need to take note of the comments above. There is more to life than a large nest egg, and there is more to sustainable economics than ‘heat vs eat’.

  10. 18/12/2013, Vaddide wrote

    Quite simply civilisation and nature must go hand in hand .
    Sustainability must be our first priority in any endeavour .
    Fracking is attractive only to people that want to prop an overinflated economic system no matter what . Pure madness to me.

  11. 19/01/2014, dfl3tch3r wrote

    Surely the most important commodities/energies have to be Air, Water, and Sunlight (Heat) – to use water (lots of it) when some countries (Africa) don’t have enough of it is bad. To contaminate it locally is bad. Ok so we get the gas out of the ground but leave 50% of the water down there, the other 50% is contaminated. The companies say they recycle it but only for re-use in the fracturing process. Seems like they will need an awful lot of water considering one drill uses millions of litres of fresh water.
    Then there is the methane which escapes into the atmosphere. Ok so it occurs naturally but fracturing speeds up the process and the companies themselves say the only capture about 10% ?? – Oil Shale where you mine the rock and then process the kerogen at ground level, I can see how this is a more environmentally friendly process than fracturing shale for gas. Gas may well be cleaner than oil but the process and the operation is environmentally damaging.

  12. 19/01/2014, dfl3tch3r wrote

    ahh the Fleet street letter at £79.99 DD

  13. 02/02/2014, dfl3tch3r wrote

    wood group…..hmmm?…….and maybe Corac is another I have seen touted on here!

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