George Osborne appeared to distance himself from his father-in-law Lord Howell without causing an awkward family row on Monday, after the Tory peer caused uproar for describing the North East of England as "desolate".
Last week Lord Howell said fracking, the controversial gas production process, could be carried out in the region without damaging the environment.
"There are large and uninhabited and desolate areas, certainly in part of the North East, where there's plenty of room for fracking, well away from anybody's residence where we could conduct without any kind of threat to the rural environment," he said.
Speaking on Radio 4's World at One programme today, Osborne said Lord Howell, his wife's father, was a "very experienced and senior politician" who could "speak for himself".
Following his remarks Lord Howell issued an apology for "any offence caused" and insisted he did "not intend to suggest that the North East is desolate and I do not believe it to be the case".
Defending the government's fracking policy, the chancellor said the process would lead to an "energy revolution" that would keep down bills for families and businesses.
"The Conservative Party understands you have to balance your energy policy so it also brings down the costs of energy that's a very important burden on families and business," he said.
"It would be a tragedy for Britain to allow this energy revolution to bypass our country," he said. "We'd all pay a very high price for that."
On Monday morning the prime minister's official spokesman said more needed to be done to promote the benefits of fracking but it should only be carried out if there is "no risk" to the environment.
The spokesperson said David Cameron believed that shale gas offers "exciting" potential for energy security, jobs and growth and the government needs to do more to promote the benefits.
The comments came amid increasing signs of unease among MPs about the innovative method of extracting gas for energy from shale deposits deep beneath the ground.
Tory MP Eric Ollerenshaw, warned of the danger that the development of shale gas facilities could create a new "North-South divide".
He told BBC Radio 4's Westminster Hour on Sunday evening: "What Lord Howell was trying to say just reinforces, if you like, a northern prejudice that southerners haven't got a clue what the North West is like, or indeed the North East.
"It does look as if the rest of the country wants to use Lancashire as its energy base. There's a particular environmental concern about the use of water and the impact on the water table... but long term what is going to be the benefit to the area where this is going to happen?
"This is not to become a North-South divide... We want (a) level playing field across the country. We do not want - and it looks at the moment - that the North gets the dirty end and the South sucks up all the energy."