The final chapter for North Sea oil

Scotland’s oil should be left under the seabed

Adam Ramsay
Adam Ramsay
15 May 2018

By tom jervis - Flickr: Tyra East, CC BY 2.0, I run into my old schoolmates from Kilry these days, the most common career path for those who haven’t stayed on their family farms is a job in the oil industry. The economy of Kilry, a sheep, cattle and tatty farming community at the foot of the Angus Glens, is tied almost as much to the fate of the fossil fuels under the North Sea as to the fertility of the soil underfoot. But in 2018 that’s not a good place to be. Falling prices have meant the collapse of employment in the oil industry and consequent chronic economic problems for the region.Seen from the perspective of those hit by the crash, this is a catastrophe. But from the wider point of view of the survival of the planet, any sign that the era of fossil fuel is approaching its end has to be good news. If, as I believe, leaving remaining North Sea oil under the seabed is the best option for everyone, the key question then becomes how to exit from local economic dependence on North Sea oil while ensuring replacement jobs for the local economy and a just transition. There are some precedents for choosing to leave fossil fuels in the ground. In 2007, the Ecuadorian president Rafael Correa volunteered not to allow the extraction of oil from the Yasuni National Park if the international community were willing to pay his government half of the estimated value of the oil in the field – $3.6 billion. In other words, his small and impoverished country was offering to take on the loss of the other $3.6 billion in order to make their contribution to preventing dangerous climate breakdown. Unable to raise the money, however, he abandoned the scheme in 2013. Despite this, Yasuni is a powerful story for the environmental movement, because it highlights a different way of looking at tackling carbon emissions. Rather than framing pollution through the neoliberal language of supply and demand, it returns it to the essentially material question of geology and atmospheric physics.The basic mathematics of climate change put forward by Bill McKibben in 2012 was that, in order to remain within the maximum ‘safe’ level of warming – 2 degrees Celsius – the maximum amount of carbon dioxide that the world could afford to pour into the atmosphere was 565 gigatons, while the total amount of carbon in the known reserves of oil companies and oil-producing states was 2,795 gigatons. This meant that, to avoid catastrophic climate breakdown we had to decide which deposits to leave in the ground.It is clear that this kind of decision has to be made democratically: it cannot be left to the market, not least because the oil majors would go bankrupt if they had to take their fossil fuel reserves off their balance sheets. In the case of North Sea oil, therefore, it is the Scottish government that needs to take the lead on this issue.The UK Treasury has been heavily subsidised by North Sea oil since just before the beginning of the Thatcher era – a source of wealth that successive Westminster governments been largely squandered. The Treasury’s main response to the recent decline in oil revenues now that the bonanza is over has been to give tax cuts to oil companies. In his penultimate budget George Osborne cut the Petroleum Revenue Tax levied on oil and gas companies from 50 per cent to 35 per cent, and in his final budget he abolished the tax altogether. Yet the only objection from either Labour or the SNP to this free gift seemed to be on the grounds that the government hadn’t handed the companies enough. Kezia Dugdale, then leader of Scottish Labour, argued that what was needed was support to ‘make sure that essential infrastructure such as platforms and pipelines are not decommissioned early’; and SNP depute leader Stewart Hosie, though he complained about ‘the lack of strategic direction’, broadly welcomed the scheme. The aim of both parties continues to be for maximum extraction, with little attention given to alternatives, or to how manage the situation when the oil runs out.Perhaps they believed that the oil giants would use Osborne’s tax breaks to keep on their employees, or maintain their wages. But, unsurprisingly, and as the unions pointed out in 2016, oil companies did not pass on that relief to their workers, whose jobs were being slashed (though Shell’s chief executive did take the opportunity to increase his salary from €5.1 million to €8.3 million). Instead, the oil majors will use most of this windfall to finance looking for profit elsewhere – seeking new oil opportunities that the atmosphere cannot afford. The main debate today in Scotland is therefore between those who support government intervention to deliver a just transition away from the oil to other good jobs while leaving much of it in the ground, and those who call for the extraction of every last drop, and refuse to plan for what the workers might do next.As coal mining communities have discovered to their cost, the kind of long-term planning that is required to secure a just transition is anathema to neoliberalism. The free-market approach is to suck as much wealth as possible from the North East of Scotland, and then to walk away, leaving the community to do the costly work of figuring out what should happen next. In contrast to all this, the Scottish Greens have proposed large-scale government intervention to create the jobs needed to secure the mass switch to a low-carbon economy. Specifically, they suggest taking a 30-60 per cent stake in the smaller companies that are now buying up the rights to remaining North Sea oil reserves as the super-majors move on. This makes sense given that the state is already subsidising the industry; but, more importantly, it means that oilfield revenue can at first be used to finance the creation of alternatives, before being rapidly wound down. Scotland, after all, has more renewable energy capacity per person than most countries. The democratic processes required for such a switch will be difficult to deliver. Firstly there is the question of local organising: whereas coal miners inhabited geographical communities of solidarity, North Sea oil workers live – when they are onshore – all across the UK. However their unions have been successful in organising them, and must be given a key role in shaping the transition. Secondly, delivering such a strategy in Scotland always comes back to the same old question of whether Holyrood has the powers – without independence – to do what’s needed. Does a just transition depend on intervention from an uninterested UK government?The honest answer is that an increasingly powerful Scottish parliament could be doing more of this work than it currently does. And, with a minority SNP government often relying on the Greens for power once more, and looking over their left shoulder to an increasingly confident Labour Party, perhaps Sturgeon will decide that the fate of her party is tied to those of North Sea oil workers: it is possible that, if the SNP cannot deliver a rapid transition to the economy of the future, they will find themselves crashing to obscurity, much faster than they ever expected. But perhaps change is coming whatever the Scottish government decides to do. When I go back home these days, many of the old agricultural families – people whose ancestors have mostly likely been planting crops and herding livestock since the Neolithic revolution – are beginning to find that they can make more money from farming wind than sheep.

The full version of this article appeared in the latest issue of Soundings: Grit, Oil and Grime.

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