That the government should step in with £250m to help ailing
, the centre of Britain’s oil and gas industry, seems right given the billions in tax revenues ministers have extracted from the North Sea over several decades. And though it might seem counterintuitive to come to the rescue of a city built on fossil fuels – given the threat of global warming – it also makes sense for
to keep producing its own oil and gas until it can find ways of doing without them.
But the reality is that the £250m “city deal” from David Cameron, topped up with £254m from the Scottish first minister, Nicola Sturgeon – will do little to stem the crisis that has left oil workers in the city using food banks.
Related: BP to announce 70% collapse in profits
Around 70,000 redundancies have already been made across the British oil and gas industry, and more will follow, given that the price of oil has fallen from $115 a barrel to $30 in a little more than 18 months. North Sea exploration and development drilling has dropped to a trickle, leaving rigs and other equipment laid up or moved elsewhere.
The danger is that the North Sea becomes the Dead Sea, with business not returning even though there is plenty of oil and gas still under the waves. Some of the government cash will be used to find ways to extract small reserves profitably, before platforms and pipelines are abandoned.
The oil price collapse has thrown
into turmoil, but its decline has long been in sight. Ministers should have made the North Sea’s twilight years productive but transitional.
A lot will depend on tax rates, which are already being cut. International companies make up the bulk of the North Sea operators, and they will stick around only if it is worth their while. This inevitably sticks in the craw of environmentalists, who see ministers rushing to the aid of Big Oil while slashing support for wind and solar energy, as well as ending carbon, capture and storage projects.
Ultimately the future of Britain’s energy should be green, not black. We need to find a new
where low-carbon technologies are celebrated – and financed properly.
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Source: Equities.com News
(January 30, 2016 - 8:56 PM EST)
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