Will the UK Ban New Oil and Gas?
There has been a lot of pressure applied to the UK Government in recent months by protestors, opposition in Parliament, and industry experts to ban the development of new oil and gas production. The Labour Party has now pledged to do just that should they win power in the next general election. In this article, we explore whether a UK ban on new oil and gas is likely and how your energy bills could be affected.
Drilling into the Current Situation
To make any predictions about the future of the UK’s oil and gas industry, we first need to understand what has led us to the current situation.
Before the Russian invasion of Ukraine in early 2022, the UK used imported gas via the Nord Stream pipelines linking Russia and mainland Europe. Souring diplomatic relations and the sanctions imposed on Russia by the NATO alliance, which the UK is a crucial member of, has effectively cut off this supply line.
However, the UK Government claims that Russian gas made up only 4% of its total gas supply in 2021 before the conflict. A Government document stated: "Great Britain’s highly diverse supply sources include pipelines from the UK and Norway continental shelf, interconnectors with the continent, and 3 liquified natural gas (LNG) terminals, providing Britain with one of the largest LNG import infrastructures in Europe."
The Rough gas field, a storage facility in the North Sea, was recently reopened in a bid to increase the UK's gas capacity by 50%. Despite this, it was revealed that the UK is lagging way behind the likes of France, Germany and the Netherlands, with just 1% of Europe’s total storage capacity.
The Government is now weighing up the possibility of drilling a controversial new oilfield and gas reserve in the North Sea called ‘Rosebank’ against the backdrop of calls to ban new oil and gas production altogether.
How Could a Ban on UK Oil and Gas Affect Energy Costs?
It has been suggested that the UK should tap into more domestic oil and gas reserves to match the demand and ultimately reduce energy costs for the consumer. Increasing supply to meet demand seems to be the obvious solution to rising energy costs at first glance, but is it really that simple?
The truth is it’s not. Although these fossil fuels are being extracted from UK territories, they don’t belong to the state. They belong to private companies like Shell and BP, who ultimately seek to boost profit margins. As a result, they will look to push up the price and sell to the highest bidder, which often comes from overseas. This combination of a short supply of fuel and greedy suppliers means that consumers are suffering the consequences and feeling the pinch.
How Could the Climate Be Affected?
The Offshore Energies UK (OEUK) group, which represents the country’s oil and gas industry, has claimed that there could be as much as 15 billion barrels remaining in North Sea oil reserves. It says that new fields will be less polluting and even claims there would be an environmental bonus for developing new production facilities there.
On the other hand, climate group Greenpeace UK claims that pre-existing fossil fuel infrastructure will already create enough harmful emissions to surpass safe climate limits without new development. In 2021, the International Energy Agency stated that there mustn’t be any new investment in oil and gas production to have a chance at meeting the objectives of the 2015 Paris Agreement.
Will the UK Ban New Oil and Gas Production?
The truth is that the answer to this question is still up in the air and could well be decided by the result of the next election or whether the current Government can withstand outside pressure to introduce a ban.
Labour leader Keir Starmer has pledged to voters that his party will scrap any plans for the development of new oil and gas facilities in the North Sea should they win power in the next general election, which is scheduled for January 2025.
Prime Minister Rishi Sunak and his Conservative Government have yet to make such a statement. They did, however, grant dozens of licences for new oil and gas exploration in the North Sea in 2022. Former Business Secretary Jacob Rees-Mogg has pushed for new production, saying: “It is now more important than ever that we make the most of sovereign energy resources."
How Can You Save Money on Your Energy Bills?
With so much concern about energy sources and the volatility of the market, consumers are looking for ways to save money on their bills now more than ever. At UKPower, we can help you compare gas and electricity suppliers to find the cheapest energy prices, switch to a better deal and cut the cost of your energy bills.
Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.