Draining every last drop of oil and gas won’t ease the cost of living crisis

As the Energy Bill moves through parliament this week, this government are missing their chance to lay the groundwork for a clean, cheap energy system. At the same time there are reports we could see even more North Sea oil and gas projects given the go ahead. But expanding domestic oil and gas production leaves us at the mercy of global price hikes, takes investment away from greener energy that is cheaper, and hastens the destruction caused by climate change.

Those lobbying to squeeze every last drop from the North Sea like to claim this will lead to lower energy prices for British families, but the truth is it will cost families more, not less. Our oil and gas are sold on global markets, so producing more in the North Sea does not cut prices for British consumers. Even Greg Hands, the government’s then energy minister, pointed this out last year.

We are over-reliant on gas and this is the major reason UK bills have sky-rocketed in the cost-of-living crisis. CarbonBrief analysis shows that gas prices accounted for 96% of the increase in household energy bills between 2019 and August 2022.

If we stay reliant on gas we will remain at the mercy of foreign dictators and global shocks, like the Ukraine war. If our government had gone greener sooner, the UK would have lower energy bills today. Successive governments’ delays in going green led to fewer onshore windfarms and a lacklustre home insulation programme, costing UK households £220 more on their energy bills in 2023.

By granting new North Sea licenses, the government is impeding progress towards a secure, cheap and renewable supply of domestic energy. Every pound invested in fossil fuel exploration is a pound which could have been invested in clean energy, and takes us further down a more expensive path. Expanding our oil and gas infrastructure now makes it harder and more expensive to switch to clean energy further down the line. Oil rigs and pipelines will become a financial burden. Training fossil fuel geologists to work in a dying industry is a waste of money, when that investment could be used to train renewable energy specialists. The earlier we act, the less money we waste.

“Every drop of greenhouse gas we emit contributes to further global warming and extreme weather.”

Climate chaos is bad for business. The heatwaves of 2022 led to more than 3000 deaths, forced our railways to close, and caused fires up and down the country. Every drop of greenhouse gas we emit contributes to further global warming and extreme weather. Allowing climate change to run away uncontrolled will cost us far more than the investment it would take to upgrade our energy system. A 2022 paper from the LSE’s Grantham Institute estimated that climate impacts already cost the UK 1.1% of GDP (£27bn in 2022). The Office for Budget Responsibility’s 2021 Fiscal Risks Report concluded: ​“The costs of failing to get climate change under control would be much larger than those of bringing emissions down to net zero.”

Instead of encouraging fossil fuel exploitation, the government should invest in the green transition to get bills down and limit the worst impacts of climate change. To reduce our reliance on gas, we need a Great Homes Upgrade – a retrofitting programme which would bring down household energy bills by over £400 and provide at least 190,000 direct jobs through to 2030. To help those worst impacted by the current crisis, the government should increase the Energy Profits Levy (and close the loopholes) to redistribute the surplus profits oil and gas companies have reaped from high energy prices caused by the Ukraine crisis. To provide real energy security, this government needs to accelerate the roll-out of renewables and invest in the clean energy grid – this is the only way to ensure the UK has access to its own supply of cheap, green energy, long into the future. 

Image: piola666