But it's Our Oil

It’s funny how quickly the North Sea turns into this mythical national piggy bank whenever there’s a wobble in the Middle East.

You hear it all the time. “Our oil.” “Our profits.” As if there’s a great big tap marked “Treasury” somewhere off Aberdeen and all we need to do is turn it a bit harder. In reality it’s private companies pulling it out, selling it at global prices, and the UK getting a cut via tax when there are profits to tax. Some years that’s decent. Some years it’s not. And when things wind down, we even help pay to tidy the whole lot away again. It’s a business, not a dividend account.

Then along comes a crisis like Iran and suddenly the answer, apparently, is to issue more licences.

Which is where it starts to get a bit surreal. The price spike you’re dealing with is happening now, this quarter, this winter if you’re unlucky. A new North Sea field will be ready years down the line, long after this particular panic has passed. Even the quicker option, tying a small find into existing kit, still takes time. So as a response to a short sharp shock, it’s like ordering a new garage because you’ve run out of petrol on the drive.

There is a more serious point buried in there about imports. Yes, the UK is becoming more reliant on them. Yes, global markets can be jumpy, and occasionally properly nasty. But drilling more here doesn’t magically give you cheap British oil. It still sells at the same global price, so you might improve the trade balance a bit, keep some jobs going and slow the decline, but you have not insulated yourself from the next spike.

And this is the bit that rarely gets mentioned. The UK electricity market is set up so that gas effectively sets the price for everything. So when gas spikes, everything spikes, regardless of how much cheaper power is on the system. Even the government is now looking at breaking that link. Which rather undermines the idea that drilling a bit more in the North Sea somehow shields us from global markets.

And then there’s the small matter of who benefits from all this urgency. Oil companies are hardly going to object to new licences. It keeps the pipeline of work going for the next 20 or 30 years, from rigs to engineers to contractors, the whole ecosystem ticking over nicely. That is entirely rational from their point of view, but it does mean their version of “energy security” comes with a fairly obvious commercial incentive attached.

The war angle does raise a more interesting question, though. If you actually wanted to knock the UK’s energy system sideways, what would you hit.

Oil and gas are quite neat targets. A handful of big bits of kit, pipelines, terminals, import facilities. Take out a few of those and you feel it very quickly, especially with gas where we don’t keep much lying around. It’s efficient, but it’s not exactly forgiving. And if you hit one properly, you are not talking about a quick tidy up. You are into months at best, and in the worst case years, because you are rebuilding large, specialised, safety critical infrastructure.

Renewables are messier. Wind farms scattered about, solar all over the place, bits of generation here, there and everywhere. Knock one out and the lights stay on. You’d have to go after lots of them to make a dent. And even then, the kit is modular. Panels, inverters, cabling, much of it can be swapped out in weeks rather than years. The weak points sit more in the grid itself, substations and transmission nodes that matter whatever is generating the power, which rather underlines that the vulnerability is in the system, not just the source.

So the problem being exposed here isn’t really “we haven’t drilled enough holes in the North Sea”. It’s that we’re still tied to fuels traded in markets we don’t control, moving through infrastructure that can be disrupted, and priced in a way that lands straight on the doorstep.

Which brings you back to the licensing debate. If the problem is a price spike now, licences don’t help. If the problem is long term exposure to volatile fossil markets, doubling down on them is a slightly odd cure. If the problem is managing decline sensibly over the next couple of decades, then fine, talk about existing fields and nearby tie backs and be honest about what that does and doesn’t achieve.

But presenting a 10 year project as an answer to a short term crisis is not strategy. It’s just something that sounds busy while everyone else is watching the oil price.