We fear the Sec of State is confused here
We can see - even if not agree with - that either of these claims can be true. But that both of them are claimed to be true at the same time suggests confusion to us:
Ministers have said expanding North Sea drilling would put the UK at further risk from volatile fossil fuel markets, amid calls from the Conservatives and some Labour MPs to breach the manifesto pledge of no new oil and gas licences.
The energy minister Michael Shanks said the UK was “learning the right lessons from this conflict so that we’re not exposed to fossil fuels in the same way again, because this isn’t the first time that households across the country have paid the price of our exposure to gas”.
Actually, we do disagree. For we actually recall a bit of history. There was a big report into supplies of fracked gas and their impact upon prices. The assumption was made that all such would be exported and thus would only have a trivial impact upon prices. But that trivial impact was in fact 4% off all European gas prices - which is a very large number of very pretty pennies. That was also the effect of only the increase in reserves that Cuadrilla claimed from just the one new drill hole. And, obviously, we don’t have any LNG trains in this country and limited pipeline capacity so not all would be exported - thus the UK price would be lower, just as the Henry Hub price in the US is cheaper than any of the European prices.
But, OK, this is politics, not reality and therefore some disagree. But this:
Miliband said that new licences in the North Sea would not make any difference to prices. “Our opponents now say we should scrap the windfall tax when all this would do is increase energy company profits and deprive us of revenue we can use to help people through this crisis.
“It has raised £12bn since the start of the Russia-Ukraine war. There can be no better example of who they [Reform and the Tories] stand up for and it’s not the British people.”
The Sec of State also says that domestic drilling produces not just buckets and buckets but entire lorryloads of tax revenue with which child poverty can be beaten etc. Further, no one at all thinks we’re going to have a system - not anytime soon - which uses no fossil fuels. We’ve not the geography for more hydro or pumped storage, batteries priced to be affordable over a dunkelflaute are still decades, if ever, away. While one of us has a definite soft spot for hydrogen that might be emotion rather than logic speaking. And so on. We’re simply not, not for decades at least, going to have a system free of the use of at least some fossil fuels. At which point we might as well be getting the tax revenue into HM Treasury via domestic and domestically taxed production rather than into the Treasury of King Harald V by buying Norwegian. You know, beat child poverty in Britain, not child poverty in Norway?
Which is where we identify that confusion. Domestic production produces vat gobs of money for politicians to spend. We’re going to be using fossil fuels - sure, sure, in diminishing quantities etc - for decades yet. How confused to you have to be to insist that foreigners should get that tax revenue, not us?
Tim Worstall