Monthly Archives: February 2012

The Stimulators versus the Austerians


I am persuaded that the government should run a deficit throughout the  recession to stimulate consumption, deliver social welfare at our time of greatest need and take advantage of low interest rates to invest in infrastructure.

On the other hand I am also persuaded that ignoring an ever increasing deficit  is to court disaster and that government should tighten its belt in the same that private businesses are being forced to. So that the markets will regain confidence in us and start lending at slightly less than usurious rates.

In short I believe that if we spend too much there will be a generation long global depression. But I also think that if we don’t spend enough there will be a generation long global depression.

I’m nothing if not flexible.

Or if I’m honest, it is just so much easier to sit on the fence on these kind of debates. I don’t have a background in economics. As is the case for most of  us I suspect, for me the last four years has been a crash course.  I am regularly seduced by the arguments of the Keynesian stimulators only to be wooed the following day by the slash and burn Austerians.

So rather than make my mind up one way or another I find it much easier to slip back into the leather elbow patched herringbone tweed jacket that was the uniform of History undergrads in the eighties. From where you can smugly observe the attack and retreat of John Maynyard Keynes disciples. Mirrored by the periodic rise and fall of the deficit hawks.

The Austerian Queen

On Thursday  I compiled a report for Drivetime tracing the last few years of this ongoing ideological battle. It has been a very quick cycle. In the Autumn of 2008 as the G20 leaders responded to Lehman Brothers etc they were all agreed on the need for stimulus. By the Autumn of 2010 when they met again in Toronto they were slashing their way through their national budgets with garden shears. And as we push on into 2012 there’s quite a few  people with considerable influence over  policy that are talking about the need for spending to stimulate job creation because otherwise a generation of unemployed people will never work again.

The Big Daddy of all the Stimulators

Of the myriad different stats either side throw up to support their position let me share just one which I find more persuasive than all others. While Europe is marching to a beat banged out on a drum in the ECB in the US two million jobs that would have been lost were either saved or created by the Obama Stimulus package. They’ve got problems on that side of the Atlantic but their recovery seems to be a good deal further down the right road than ours.

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Balancing the fracking equation.

Some psychologists believe that part of the reason that “fuck” is by far the most popular swear word in the English language is because it makes a particularly satisfying sound in the mouth. The hard K sound in the middle of the word can be, they say, a wonderful expression of frustration, anger, pain or astonishment. In the hands of the right user it is  simultaneously ugly, and a great way of grabbing somebody’s attention.

You have to wonder then would the debate about the Shale Gas Industry’s newest method of extraction have generated half as much heat if Hydraulic Fracturing hadn’t become shortened to Fracking.

Google “fracking” and five minutes of reading the search results will leave you with the clear impression that you would only invite this into your community if you had a death wish. Google the term “hydraulic fracturing” and you get a rather more benign view of what is  exactly the same process. Of course both the shale gas industry websites and the webpages of its opponents state their cases in nothing short of absolute terms and gloss over inconvenient facts.

It’s not often that the arguments for and against a proposal are so finely balanced. On the one hand the tax revenue, job creation, energy security and potential trickle-down economics that shale gas extraction offers are very seductive. A lot less so if any of the potential downsides from contamination of aquifers, to dirtying our pristine food brand came to pass.

Sorting the real from the apparent in a debate that is increasingly marked by the greater amount of heat that it is generating than light is quite hard. You need to balance against what the industry claims the distinct probability that the extent of the estimated reserves (€55bn) are more likely to be overstated than underestimated, the promised tax take (€5bn) underwhelming after write offs, and the extent of our energy independence a long way short of autonomy.

Equally some of  the claims of the campaigners need to be consumed with unhealthy doses of salt. Comparing what might happen here with what has happened in the US is wrongheaded. The Bush White House gave the Fracking industry a free pass on compliance with water pollution legislation. That simply would not happen here. Even if Minister Rabbitte allowed it the EU would fine us day after day for permitting contamination of groundwater.

Online hyperbole

This debate is at a far more critical juncture than has been acknowledged publicly. Tamboran Resources is the only company that seems to be doing anything with its exploration licence. Others may be waiting to see how they fare before going to any great expense of their own. Tamboran is seeking investors to back its gas plays and depending on how that goes they may float on the stock market in the first few months of this year.  While it is true to say the success of that wooing of investors and/or IPO will determine what happens in Leitrim the reverse is equally true. The promise of a Corrib Gas style campaign of opposition would have to significantly cool investors ardour for Tamboran. The CEO has said that success of the project depends entirely on the costs above ground, not the viability of what is under it. So there is a very real possibility that Fracking in the Lough Allen basin could be over before it begins.

Richard Moorman, CEO, Tamboran Resources

It is a shocking oversight that no independent research into what is proposed for Ireland was undertaken before the last government handed out the licences. We could be opening the door to an environmentally ruinous industrial enterprise that will only profit its owners. Or we could be cutting of our noses to spite the country’s face if we allow a vocal but small campaign to decide public policy. We simply don’t know which is the case because oddly the  responsible Department (then under the stewardship of a Green Party minister) didn’t prepare the ground properly.

In order for us to balance the pluses and minuses on either side of this equation properly we badly need the study that Pat Rabbitte commissioned the EPA to conduct into the effects of Fracking. It is due at the end of this month or the beginning of March. Ideally it would answer the following questions:

– Is it possible, as Tamboran claim, to frack without the use of chemicals?

– If so will the EPA hold all companies to this standard?

– Does the EPA share Tamboran’s estimation of the size of the potential gas reserve?

– What will be the impact of the company’s water requirements on local supply?

– Can the retrieved water be disposed of safely?

– Can you determine clear conclusions from the contradictory research thrown up by either side as to the consequences to human health?

– What will be the visual impact of up to 2,500 well heads?

Until we get that report have a listen to my Drivetime report from North Leitrim on what’s on offer and what’s at stake. And meet the campaigners I talked to in Manorhamilton on the day Tamboran announced the size of their gas find.

Loss of visual amenity in Nevada


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