North Sea Oil

[scrumpyjack]

I see Labour plan to stop all new developments in the North Sea, whilst admitting we will continue to be using oil for decades to come, albeit at slowly reducing levels.

To me this seems bonkers. If we are going to have to use oil, it must be much preferable to use our own, employing our workers and benefitting our balance of payments, than to import it from Saudi Arabia.

By all means focus on how we cut our consumption of oil, if you buy the net zero theory, but what is the point on stopping our own production whilst we still use the product?

Economically illiterate, unless I've missed something?

[pje16]

You expected an intelligent idea from the Labour Party - dream on

[1nvest]

I see Labour plan to stop all new developments in the North Sea, whilst admitting we will continue to be using oil for decades to come, albeit at slowly reducing levels.

To me this seems bonkers. If we are going to have to use oil, it must be much preferable to use our own, employing our workers and benefiting our balance of payments, than to import it from Saudi Arabia.

By all means focus on how we cut our consumption of oil, if you buy the net zero theory, but what is the point on stopping our own production whilst we still use the product?

Economically illiterate, unless I've missed something?

You (British consumers) still pay the same price whether that oil was extracted from within the UK or elsewhere. When the crunch came, a energy (high prices) crisis - that has knock on effects right across the economy, taxpayers contributed massively towards energy firms excessive profiteering. XOM across 2021/2022 for instance saw its share price increase 75% annualised (three-fold increase). Under a good government then the potential benefits might have been pre-written into law. Licences that depicted less extreme profits, more of such great gains being directed towards taxpayers as other countries do rather than the high costs/high inflation we're seeing. Same for mortgages, government policy could direct 30 year fixed rate terms as others do which also smooths down risk/volatility. Same for food (grain). Fundamentally we have 650 MP's and 800+ Lords that are a liability for the people (benefit to the businesses that bribe them). Can't even arrange/hold a cake-party in a bakery, just in it for themselves (business bribes/expenses claims etc.) rather than actually representing those that elected them (MP's, Lords are of course 'appointed' as part of the bribery/corruption mechanism).

No matter, I'm sure taxpayers/savers can still contribute a lot more yet. Will have to, as more of the 1% that pay a third of the tax take opt to move elsewhere and the remainder have to pay 50% more in taxes in order to fill that hole.

[1nvest]

You expected an intelligent idea from the Labour Party - dream on

I guess a half-baked idea is better than a PM that is working in his Indian partners/family best interests.

[squareofthewicket]

...:

a PM that is working in his Indian partners/family best interests.

As opposed to the predecssors (labour and Tory) who were chums with the Russian oligarchs and other business pals???
Even the Labour politicians are slippery and any hare-brained ideas they come up will screw up the country and to some extent my finances even more.

[NotSure]

....Economically illiterate, unless I've missed something?

maybe it's like Brexit? Negative all the way economically, but an important point of principle?

[1nvest]

a PM that is working in his Indian partners/family best interests.

As opposed to the predecssors (labour and Tory) who were chums with the Russian oligarchs and other business pals???
Even the Labour politicians are slippery and any hare-brained ideas they come up will screw up the country and to some extent my finances even more.

Just do what others do, don't keep money in the UK, invest it elsewhere. Even British Telecom pension fund now only holds around 0.3% exposure to the UK. As/when the 1% that pay a third of the total income tax take flight the country due to poor governance (Sunak), so the rest are left with having to pay 50% more in taxes or other means to fill that hole. A factor with attracting in inward investment, albeit oligarchs/whatever, is that if you can double-up the 1% number to 2% then that opens up the rest having their taxes halved, which in turn promotes inward investment and growth. But that option has been firmly vilified, as that better serves businesses interests, whilst leaving the general population in a mire. No matter, UK loss is anothers gain.

[mc2fool]

By all means focus on how we cut our consumption of oil, if you buy the net zero theory, but what is the point on stopping our own production whilst we still use the product?

AIUI there's no proposal to stop our own production but rather to halt issuing licences for new oil and gas exploration in the North Sea. Also AIUI if new exploration licences were granted any new oilfields would take 10 or 20 years to come on stream.

So really the question -- to which I do not know the answer -- is will the declining supply curve, from existing fields drying up and not granting new licences to replace them in the coming decades, match the declining demand curve from cutting our consumption?

One could then also ask, if not what would be the right number of new licences to issue now to try to match the demand in 10 to 20 years time? Problematic of course as we don't have a closed system where all North Sea oil has to be sold and used in and only in the UK....

[scrumpyjack]

By all means focus on how we cut our consumption of oil, if you buy the net zero theory, but what is the point on stopping our own production whilst we still use the product?

AIUI there's no proposal to stop our own production but rather to halt issuing licences for new oil and gas exploration in the North Sea. Also AIUI if new exploration licences were granted any new oilfields would take 10 or 20 years to come on stream.

So really the question -- to which I do not know the answer -- is will the declining supply curve, from existing fields drying up and not granting new licences to replace them in the coming decades, match the declining demand curve from cutting our consumption?

One could then also ask, if not what would be the right number of new licences to issue now to try to match the demand in 10 to 20 years time? Problematic of course as we don't have a closed system where all North Sea oil has to be sold and used in and only in the UK....

It's a commercial matter for those seeking to develop oil/gas extraction. They would have no reason to seek to develop a field which could not pay back its cost within the timescale of expected oil consumption. So having a government ban on new developments still makes no sense. Better to extract as much as we can from our own resources whilst there is demand, rather than import. The government focus should be on minimising consumption rather than restricting production.

[Nimrod103]

By all means focus on how we cut our consumption of oil, if you buy the net zero theory, but what is the point on stopping our own production whilst we still use the product?

AIUI there's no proposal to stop our own production but rather to halt issuing licences for new oil and gas exploration in the North Sea. Also AIUI if new exploration licences were granted any new oilfields would take 10 or 20 years to come on stream.

So really the question -- to which I do not know the answer -- is will the declining supply curve, from existing fields drying up and not granting new licences to replace them in the coming decades, match the declining demand curve from cutting our consumption?

One could then also ask, if not what would be the right number of new licences to issue now to try to match the demand in 10 to 20 years time? Problematic of course as we don't have a closed system where all North Sea oil has to be sold and used in and only in the UK....

Where do you get the idea that new fields would take 10-20 years to come onstream?
The North Sea is a benign environment, and if the infrastructure already out there is prevented from serving new fields, it will be shut down and never be replaced. The North Sea is admittedly in its endgame, but we need to race after E&P now so that every last economic drop can be produced, to save imports, pay taxes and support jobs. If the pipelines etc are allowed to shut, the UK will not recover what remains of this bounty.

[mc2fool]

Where do you get the idea that new fields would take 10-20 years to come onstream?

https://www.theguardian.com/politics/2023/jun/06/lord-deben-backs-labours-plan-to-halt-new-north-sea-oil-and-gas-drilling

...we need to race after E&P now so that every last economic drop can be produced, to save imports...

That's the Tory line but of course we could save imports right now if we didn't export most of it.

"The UK imported £30.0 billion of oil in 2021 (£17.6 billion crude oil, £12.4 billion refined oil), and exported £28.3 billion of oil (£17.9 billion crude oil, £10.4 billion refined oil)." ONS

[CliffEdge]

Thatcher and Blair/Brown were patriots.

[Nimrod103]

Where do you get the idea that new fields would take 10-20 years to come onstream?

https://www.theguardian.com/politics/2023/jun/06/lord-deben-backs-labours-plan-to-halt-new-north-sea-oil-and-gas-drilling

Gummer told the Guardian that leaders across the political spectrum should follow Labour’s lead. “This should be the common view of all parties,” he said. He said it was “nonsense” to claim that new oil and gas fields would reduce energy bills. “These are new oilfields that will not come on stream for another 10 or 20 years. And when they do, the oil and gas will be sold to the highest bidder. So it will not reduce prices in the UK. The only way you could make them reduce bills here would be to nationalise them.”


Nobody dummer than John Gummer (Lord Deben), history graduate and expert on science and engineering. The only reason for 10-20 year delay from discovery to production would be doubts over the economics which required more exploration, an issue which besets some marginal fields. I am surprised as a Tory he seems to have abandoned market economics which determines the price of oil and everything else, except members of the HoL - we seem to have a glut of them yet their price never goes down.

...we need to race after E&P now so that every last economic drop can be produced, to save imports...

That's the Tory line but of course we could save imports right now if we didn't export most of it.

"The UK imported £30.0 billion of oil in 2021 (£17.6 billion crude oil, £12.4 billion refined oil), and exported £28.3 billion of oil (£17.9 billion crude oil, £10.4 billion refined oil)." ONS

The UK oil industry is a refining and trading entrepot, as well as managing production. You will notice that we import the same amount as we export probably to get the right mix of crudes suitable for our refineries.

[Lootman]

By all means focus on how we cut our consumption of oil, if you buy the net zero theory, but what is the point on stopping our own production whilst we still use the product?

AIUI there's no proposal to stop our own production but rather to halt issuing licences for new oil and gas exploration in the North Sea. Also AIUI if new exploration licences were granted any new oilfields would take 10 or 20 years to come on stream.

So really the question -- to which I do not know the answer -- is will the declining supply curve, from existing fields drying up and not granting new licences to replace them in the coming decades, match the declining demand curve from cutting our consumption?

One could then also ask, if not what would be the right number of new licences to issue now to try to match the demand in 10 to 20 years time? Problematic of course as we don't have a closed system where all North Sea oil has to be sold and used in and only in the UK....

I do not know the answer to your question either but one clue is to go back 10-15 years and look at the impact of not fracking, comparing that to the American decision to frack, baby, frack.

On my last visit to the US earlier this year exactly nobody was complaining about high home heating costs.

[scrumpyjack]

It isn't a question of matching North Sea production to UK consumption. We don't do that with any other industry and Norway for example certainly doesn't do it with oil. We can sell it to France, Germany etc etc so they can use less Saudi or Russian oil. Oil consumption overall is not going to be affected by how much we do or don't produce. That is a factor of demand in this country and, as I said before, the government's focus should be on encouraging the use of non oil energy. Gummer is an idiot!

[Dod101]

https://www.theguardian.com/politics/2023/jun/06/lord-deben-backs-labours-plan-to-halt-new-north-sea-oil-and-gas-drilling

Gummer told the Guardian that leaders across the political spectrum should follow Labour’s lead. “This should be the common view of all parties,” he said. He said it was “nonsense” to claim that new oil and gas fields would reduce energy bills. “These are new oilfields that will not come on stream for another 10 or 20 years. And when they do, the oil and gas will be sold to the highest bidder. So it will not reduce prices in the UK. The only way you could make them reduce bills here would be to nationalise them.”


Nobody dummer than John Gummer (Lord Deben), history graduate and expert on science and engineering. The only reason for 10-20 year delay from discovery to production would be doubts over the economics which required more exploration, an issue which besets some marginal fields. I am surprised as a Tory he seems to have abandoned market economics which determines the price of oil and everything else, except members of the HoL - we seem to have a glut of them yet their price never goes down.

That's the Tory line but of course we could save imports right now if we didn't export most of it.

"The UK imported £30.0 billion of oil in 2021 (£17.6 billion crude oil, £12.4 billion refined oil), and exported £28.3 billion of oil (£17.9 billion crude oil, £10.4 billion refined oil)." ONS

The UK oil industry is a refining and trading entrepot, as well as managing production. You will notice that we import the same amount as we export probably to get the right mix of crudes suitable for our refineries.

And I assume mostly on forward contracts in the world market. I doubt that producers favour the ‘home’ market over the international one.

Dod