George Osborne in his Budget speech on Wednesday talked, correctly, about US industrial energy costs being half those of the UK. The situation has deteriorated rapidly over the past five years. His proposed response is worth quoting directly:

“We need to cut our energy costs. We’re going to do this by investing in new sources of energy: new nuclear power, renewables, and a shale gas revolution.”

This must be a speechwriter’s joke. A line written in where the content bears absolutely no relationship to reality. New nuclear at £92.50 a megawatt hour will double the current wholesale price of electricity. New offshore wind on the Department of Energy & Climate Change’s own figures, which many feel are too low, will cost more than £120/Mwhr. These are not secret figures. They are well known in the Treasury, as is the risk of generating capacity failing to meet demand. There was no mention of that little problem.

The chancellor’s whole argument seems to rest on forecasts of ever rising energy prices. Mr Osborne and his advisers seem not to have noticed that despite the crisis in Ukraine, continuing problems in Libya, sanctions on Iran and all the other issues affecting oil supply, prices have fallen by $5 a barrel over the past month. Gas prices, which one might have expected to be more volatile on the news from Ukraine, are also relatively stable with forward prices up by less than 10 per cent even at the height of the crisis.

But the real joke is the much-promised shale gas revolution. One shale gas well has been fracked in the UK. Two applications are pending but because of the length and complexity of the process it is quite possible that no more wells at all will be drilled in the UK this year. This is in danger of becoming a revolution that never happens. What is surprising is the lack of urgency in government.

The potential is clearly in place and waiting to be tested. There is shale gas in the ground across northern England, and perhaps elsewhere but we do not yet know if it can be produced commercially. The latest research from Imperial College London is positive but not conclusive. We will not know until some drilling has taken place. The National Trust and others have a good case for saying that drilling should avoid national parks and areas of outstanding natural beauty, though it is important to remember that we are talking about horizontal drilling which can be undertaken from a well site several kilometres away. BP in the 1980s managed an exemplary drilling venture at Wytch Farm in Dorset which left intact and unharmed one of the most beautiful stretches of coastline in the country.

There is a strong case for shale gas to be developed in this country and across Europe. Industrial costs and jobs are one part of this. The other is the import dependence which will grow if shale gas is not developed. By 2030 that dependence could grow to 75 per cent. That puts a burden on the balance of payments. It also puts the UK, as an integral part of the European gas market, in a position of vulnerability to Russia’s Vladimir Putin and his successors. It is all very well to say that Moscow will never cut off gas supplies. Three weeks ago we might have said Russia would never again invade the territory of another sovereign state.

Developing our own resources – safely and under good regulatory control – makes every sort of sense. Shale cannot solve all our immediate energy policy challenges but it can underpin a diverse, balanced energy economy. US energy costs are half those in the UK because a shale gas revolution has changed the economics of energy supply. In the absence of shale gas in places such as the UK that gap will widen.

Talking about a revolution is easy. Delivering that revolution is harder as it requires serious policy work. Sadly it seems that changing bingo tax is a higher priority than doing something about serious about the UK’s failing energy policy.