Economic Report 2013

c) Transport Oil products continue to dominate fuels for transport throughout the world (>90 per cent share). Apart from the electrification of railway lines with high traffic densities, the inherent properties of oil products – availability, portability and energy density – make them uniquely suitable for land, sea and air transport, especially over long distances. As mentioned previously, however, gas is now being tried on a modest scale in medium to heavy commercial road transport in the USA and in buses in various parts of the world. While some of the new technologies being developed demonstrate applicability for road transport over shorter distances, such as for cars, buses and vans in and around towns and cities, none so far shows signs of replacing oil products for longer distances on land, never mind at sea or in the air. And thus far, neither hybrid nor purely electric vehicles have captured the public’s imagination. Meanwhile, under a combination of more stringent regulatory requirements, high prices and competitive pressures, manufacturers have already made considerable progress in improving the fuel efficiency of petrol and diesel vehicles during the past ten years and there is the likely prospect of more advances in technology improving efficiency yet further during the coming years. In the air, new technologies such as are evident in Boeing’s 787, which entered service in October 2011, and Airbus’s A350, which flew for the first time in June 2013, are creating step changes in fuel efficiency. Even with long established airframes, such as the popular 737 and A320 families of aircraft,

the relentless demands of competition are delivering ever better performance and lower fuel consumption. It seems inevitable that oil’s products will remain the dominant fuels for transport until 2030 and probably beyond. As a result of the extraordinary developments in the USA in the past few years, one of the most openly debated subjects in Britain and the EU has been shale gas and the hydraulic fracturing (or ‘fracking’) of wells, a technique which has existed in oil and gas exploration and production for more than 60 years, long before shale gas exploration started 20 . A wide variety of reports has been published, but a joint publication by the Royal Society and the Royal Academy of Engineering in June 2012 21 was among the more keenly awaited in this country. It had been commissioned by the government’s Chief Scientific Adviser in the aftermath of two small tremors following hydraulic fracturing of a well by Cuadrilla Resources in Lancashire during spring 2011. DECC lifted the temporary moratorium on shale gas drilling in mid-December 2012, together with imposing some additional controls on operators to mitigate the risks of a recurrence. In June 2013, DECC released the latest assessment by the British Geological Survey 22 of the potential shale gas resources in the Bowland Shale across the north midlands and northern England (most of Lancashire, Yorkshire, Cheshire, Staffordshire, Derbyshire and Nottinghamshire plus parts Gas from Shale

20 There are understood to be more than a million wells worldwide which have been hydraulically fractured; such wells already exist both onshore and offshore the UK.

21 See http://www.raeng.org.uk/news/publications/list/reports/Shale_Gas.pdf 22 See https://www.gov.uk/government/publications/bowland-shale-gas-study

67

ECONOMIC REPORT 2013