oil industry

UKOOG, the trade body for the onshore oil and gas industry, has today hit back at the Labour Party’s pledge to ban fracking should they win the upcoming general election.

 

The Labour Party manifesto released today raises a number of issues they wish to address: the “deterioration of the current account”, the need to “ensure the security of energy supply and keep the lights on” and that “one-in-ten households are in fuel poverty”. However, it also includes a promise to ban fracking, a pledge which will hurt the UK’s energy security, see potential UK jobs find their way overseas and keep the cost of energy bills rising.

 

Ken Cronin, chief executive of UKOOG, said “The Labour Party’s position has changed dramatically in two years and shows a misunderstanding of how we use energy in this country. The only solution to our pressing energy needs is a balanced mix of nuclear, renewables and gas – produced here in this country, creating tax revenues and skilled jobs.”

 

Looking at Labour’s manifesto pledges, UKOOG would like to highlight these key facts:

 

  • On the “deterioration of the current account”:  Within 20 years, the UK will be importing over 75% of our gas, costing the equivalent of over £300 per household 1. This is money simply leaving the country, having a big impact on our current account in its wake. The simple way of avoiding this is to produce our own gas onshore and offshore.

 

  • On the need to “ensure security of energy supply and keep the lights on”: Along with the polarisation of the debate that Labour appears to want to promote, there is an obsession when discussing energy to talk about keeping the lights on. The Labour Party should know that this manifesto has been published during a period when gas is contributing to nearly half of the UK’s electricity generation.  But this is only a third of the story – over two-thirds of our energy is used for heat and transport. Heating for our homes and workplaces is almost exclusively fuelled by gas, increasingly from overseas. So how does turning away from gas help energy security or the 84% of our homes that are heated by gas?

 

  • Pointing out that “one-in-ten households are in fuel poverty”: At present, there is no viable or affordable alternative to natural gas. No other options have yet been found that can heat our homes, or provide high-grade heat and feedstocks to our industry, that also meet our climate change targets and keep people in the jobs they currently have. Electricity is around three times more expensive per kilowatt hour than gas2.  This is why households with electric heating are far more likely to be in fuel poverty3.

 

 

Notes 

[1]Oil and Gas Authority, UKCS oil and gas production (and demand) projections https://www.ogauthority.co.uk/data-centre/data-downloads-and-publications/production-projections/; 27.1 million households in the UK (see ONS – https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/bulletins/familiesandhouseholds/2016)

2Average domestic electricity price of 14.41 pence per KWh and gas price of 4.34 pence per KWh; average non-domestic electricity price (excluding Climate Change Levy) of 9.99 pence per KWh and gas price of 2.23 pence per KWh. Department for Business, Energy and Industrial Strategy, Quarterly Energy Prices, December 2016, Tables 2.2.3, 2.3.3 and 3.4.1 https://www.gov.uk/government/statistics/quarterly-energy-prices-december-2016

3In England, approximately 15 per cent of those off the gas network are fuel poor, compared to 10 per cent of those on it.  Department of Energy and Climate Change, Annual Fuel Poverty Statistics Report, 2016, Figure 3.13https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/557400/Annual_Fuel_Poverty_Statistics_Report_2016_-_revised_30.09.2016.pdf .  In Scotland, half of all people living in houses off the gas grid are fuel poor, compared with an overall fuel poverty rate of 39%.  Scottish Parliament Information Centre, Financial Scrutiny Unit Briefing: Fuel Poverty in Scotland, March 2015 http://www.scottish.parliament.uk/ResearchBriefingsAndFactsheets/S4/SB_15-13_Fuel_Poverty_in_Scotland.pdf.  In Wales, 44% of off-gas households were fuel poor in 2008, compared with 22% of on-gas households.  BRE, Living in Wales 2008 – Fuel Poverty Statistics, November 2010, Figure 6 http://gov.wales/docs/caecd/research/110321fuel.pdf

 

About UKOOG:

 

UKOOG is the representative body for the UK onshore oil and gas industry, including exploration, production and storage. The organisation’s objectives are to enhance the profile of the onshore industry, promote better and more open dialogue with key stakeholders, deliver industry wide initiatives and programmes and to ensure standards in safety, the environment and operations are maintained to the highest possible level. Membership is open to all companies active in the onshore industry including those involved in the supply chain. www.ukoog.org.uk

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