We need energy sovereignty now – which means oil and gas
Tanker lorry delivering fuel heating oil to residential customer (Alamy)
3 min read
In 1953, Mohammad Mosaddegh was overthrown as prime minister of Iran in an Anglo-American coup.
In Two Minutes to Midnight: 1953 – The Year of Living Dangerously, Roger Hermiston describes how the Iranian oil underpinning Britain’s postwar recovery was put at risk when Mosaddegh moved to nationalise the Anglo-Iranian Oil Company. The CIA and MI6 responded quickly.
But replacing an elected government with a Shah didn’t provide Britain with greater energy security. Instead, the Shah’s repression produced a backlash, leading to the 1979 Islamic Revolution, during which my British father-in-law had to hide in an Iranian power station cupboard from hostile revolutionaries shouting anti-Western slogans. In the years since, we have continued to rely on countries highly hostile to us for our energy supplies. We cannot go on like this, simply waiting for the next energy crisis to surprise us.
We absolutely do need to drive hard for renewables, but we also need to get wise about oil and gas
The UK’s particular exposure to Iranian crises and global energy markets has now led the IMF to revise its UK growth forecast downwards. The crisis especially affects the more than 14,000 properties in my constituency of North Northumberland that are off the gas grid and rely on heating oil (derived from jet kerosene) or LPG (liquid petroleum gas) to warm their homes. As soon as the first American missile was launched into Iran, the cost of my constituents’ heating and hot water more than doubled.
To be fair, few countries are totally self-sufficient in energy. And for a time, we got lucky. In the 1970s the North Sea oil and gas boom emerged and promised heavenly manna forever. But successive governments managed this national asset poorly. No strategic reserves. No public control of private production. And, unlike Norway, no sovereign wealth fund.
This Labour government is more alive to the moment than its predecessors, with the combination of the launch of Great British Energy, massive investment in the National Grid and planning reform for clean energy projects providing a low-carbon off-ramp from the global fossil fuel markets. This is welcome.
But what about gas, which we will continue to need for a long time? What about jet kerosene and LPG for my constituents? Because the truth is that we will not be able to fully depend on low- or no-carbon substitutes in the foreseeable future. There are no accessible substitutes for jet kerosene boilers: biomass boilers are too costly to fit, while alternative liquid heating fuels are more expensive to run or reliant on uncertain supply chains. Fitting heat pumps on single stone cottages in rural Northumberland is neither straightforward nor affordable for many. That means we need to return to the North Sea.
One of the issues with oil and gas is our lack of infrastructure: North Sea oil doesn’t work with our refineries, and we lack the storage capacity for gas, forcing us to export even when we have domestic supply shortages. Both our refinery and storage capacity have dropped since 2010 – the strategic carelessness of the Conservative governments continues to astonish.
The answer, then, is to build that capacity back via GB Energy. And as we do so, we should set up vehicles by which a certain proportion of oil and gas extracted in the North Sea comes under the possession of the UK government as a strategic reserve. Or, even better, to control the extraction through a majority stake in the developing company. As we sell on the market, the tax receipts should be invested in a sovereign wealth fund to develop the strategic British infrastructure of the future.
More than 70 years after events in Iran first threatened our energy security, we remain reliant on fragile supply chains to keep our homes warm. We absolutely do need to drive hard for renewables, but we also need to get wise about oil and gas; there will be more energy shocks, more hard winters for my constituents. We need energy sovereignty now, and I will welcome whatever form that takes.
David Smith is Labour MP for North Northumberland
