Comment: Shale may not be a panacea for gas shortages

It is seen as a potentially plentiful source of new energy and does not require the costs and risks involved with importing other forms of gas.

However, it is hardly risk-free. The process of fracking, or fracturing rock to release the gas, is hugely controversial and has created a wall of opposition that is bound to delay and abort some projects.

Now comes a report from the energy consultancy Wood Mackenzie casting doubt on the commercial viability of the industry because of the scale of exploration required. It doubts that shale gas will have much impact on gas prices until beyond 2025.

Supporters, it says, will also have to overcome public concern over safety, a shortage of companies active in the industry and a similarly under-strength supply chain and labour force. On top of that are regulatory requirements that will slow the whole process down.

Glasgow engineer Weir Group is buying in to the shale gas industry in the US where it clearly sees enormous opportunities. The US is somewhat ahead of the game and can benefit from economies of scale.

Its more transparent regulatory framework is also geared more to approving wells and is well staffed.

The UK government has made it clear that this is an industry it wants to promote but there are clearly some substantial hurdles it needs to overcome if it is to get the results it desires.

Splitting or fencing both fail to win total support

To split or not to split? That has been the question hanging over the banking sector and which has divided opinion between those who want tougher structural change and those who believe such measures would be more punitive than practical.

The Parliamentary Commission on Banking Standards has warned that the proposed ringfencing of retail from investment banking operations does not go far enough and wants additional reserve powers to allow the authorities to go for what it calls the “electrification” option of full separation if it is not working.

The commission’s worry seems to be that the banks will play the rules to their own advantage, finding ways of picking holes in the ringfence which, after all, will be difficult to design and just as tricky to police.

It has been argued here numerous times that the ringfence is not a convincing solution to the crisis that hit the banking sector, but it is preferable to separation which would restrict the ability of banks to provide the sort of global services that their bigger clients demand.

Both options defy the undeniable fact that the problems the banks faced were evident on each side of what will become ringfenced operations. In Northern Rock it was excessive lending to the retail base; at RBS it was the investment banking business and an aggressive acquisitions strategy that prompted its near-collapse.

Since the initial meltdown in 2007-9, the sector has hardly helped its own rehabilitation because of the subsequent examples of market-rigging, money-laundering and mis-selling of insurance products.

Just how the ringfencing or separation of functions will help weed out such practices is not too clear. But there is a lot of work to be done and at huge cost to prepare the banks for the new structure. We can only hope it proves worthwhile.