Shale gas set to halve oil prices in a decade

The shale gas revolution could push oil prices down over the next 10 years says the former forecasting head of the Organisation of Economic Cooperation and Development.

In a report written with Puma Energy, which The Times newspaper reported to have seen, Dr John Llewellyn described the invention of "fracking" to extract the gas as "game changing technology".

Consequently, it would come as no surprise to Llewellyn if the price of oil were to fall to around $50 a barrel between now and 2020.

According to Llewellyn the trend could be the direct opposite of what happened in the 1970s when the price of oil doubled on a dramatic increase in US imports.

"(The change) contributed importantly to the quadrupling of the world energy price in 1973-74 and further double in 1978-79," the report said.

"If, as expected, the US becomes energy self-sufficient over the coming 20 years, the shift could be equally profoud."

The news comes following estimates last week that suggested that the UK had enough shale gas to power the country for 43 years.

The International Energy Association last month said, in its latest five-year outlook, that the supply shock of stronger than expected North American output could result in depressed oil prices till 2018.

Meanwhile, according to Christopher Booker said in The Telegraph, even by the cautious predictions of the British Geological Survey, the UK had a potential shale-gas resource as significant as the oil and gas it found in The North Sea, which would be enough to meet all the UK's energy needs for many decades to come.

He added that it highlighted the utter failure of successive governments on the national energy policy front, with their obsession with global warming and the delusion that, by cutting down our ''carbon emissions'', the earth's climate could be somehow changed.

Slamming the government's current policy, he said "on the one hand it was based on building tens of thousands of useless and ludicrously expensive wind turbines, made possible only by forcing people to pay double or treble the normal cost of the pitiful amount of electricity they so unreliably produced."

On the other, with taxes and regulations, ''renewables'' were sought to be made competitive, even as they planned to double the cost of any power from other sources, whether fossil fuels or nuclear. In short the government wanted to make the UK's electricity more expensive than anywhere else in the world.