British Prime Minister David Cameron has pledged support from the government for Britain’s oil and gas industry, saying that he is prepared to do everything he can. The comments come as the price of crude continues to waver.
Mr Cameron has extended a promise of support on a day that crude plummeted to under $50 for the first time in tend years. He has also suggested that the industry’s difficulties have demonstrated the ‘misguided’ nature of the Scottish Nationalist Party’s plan for independence.
The British government has slashed the supplementary levy placed on offshore businesses to 30pc, from 32pc, as announced in the Autumn Statement. However, industry leaders are calling on ministers to do more and completely scrap this extra tax. Anas Sarwar, the Labour MP, brought up the subject at PM’s Question Time this week, pointing out that Brent Crude was now less than $50 a barrel, which was bad news for Scotland’s oil and gas industry and particularly its thousands of workers.
Mr Cameron managed to avoid Mr Sarwar’s direct call for participation in an oil delegation across parties, but he did promise that his government would act and ‘try’ to offer help to the ailing sector. He said that the UKCS was a vital part of the UK’s economy and ‘vital’ to Britain, meaning that everything should be done to assist it.
Alistair Carmichael, the Scottish Secretary, has travelled to Aberdeen today to reiterate the government’s commitment to the industry, saying that he recognises the struggle facing the industry and the people that work within it.
George Osborne, the Chancellor, has also spoken to his colleagues in the Cabinet, speaking about his fears over the economic effects of a struggling UK North Sea and the growth in fears for the thousands of jobs that it supports.
The continuing tumble in oil prices was discussed at this year’s first coalition Cabinet meeting, as ministers debated 2015’s key economic challenges. The $50 Brent Crude mark was last seen in 2009 in the depths of the recession.
According to figures from Oil & Gas UK, BIS and Opito, as many as 35,000 jobs could be slashed in the industry in the coming five years. The report was published when oil prices were still slightly higher at $63 a barrel. Brindex, the independent association of explorers, has said that no North Sea projects can operate profitably if oil drops to less than $60 a barrel.
The Scottish government is facing mounting pressure to stage an intervention. Jim Murphy, the Labour leader, has urged ministers to create a fund to assist the industry. Nicola Sturgeon, the First Minister, has confirmed via a spokesman, however, that the crisis was not on the agenda at this week’s Scottish Cabinet meeting, which fuelled anger amongst SNP opponents.
Politics aside, however, the oil industry’s thousands of workers, its investors, the vast numbers of businesses that work in the supply chain and the general public want to see the industry find its feet once again and for the government to take concrete action. While motorists may benefit from lower prices at the pump, the economic disadvantage of a sustained downturn in UK oil and gas will be felt far more harshly across all of the country’s economy.Last updated on 11:40AM - 17/01/15