Another war in the Middle East caused a surge in oil prices, with the cost of more than one hundred dollars per barrel. As Arab monarchies start to mothball oil fields due to Iranian strikes, and danger of paralysing global economy if oil tankers won’t be able to cross the strait of Hormuz, G7 countries are considering unbarring strategic oil reserves. This would be even more disastrous event for oil prices, so economists examine other solutions.
Due to ongoing crisis, Europe and US considering the decision to temporary lift oil sanctions on Russia, to mitigate the potential impact of fuel crisis. However, such move will lead to catastrophic consequences to energy security of EU and UK. Putin never hesitated to use energy as a blackmail weapon and definitely will start to pressure Europe the moment as first drop of Russian oil will start dripping from a pipeline.
There is another option on the table – to increase supply of energy resources from US. But the last year has proved that current Trump’s administration is unreliable partner, and Europe has lost, even temporarily, its biggest and strongest ally. It isn’t beneficial for Europe to swap the owner of their energy dependency. Both UK and EU must find a way to energy independence. And the answer is right beneath our noses.
Scotland still has rich oil reserves, but due to Net Zero policies it’s not allowed to develop them. This is undoubtedly correct to protect Scottish nature, but in such disturbing and grim times for the world, and for Scotland, we can’t ignore such opportunity to establish energy self-sufficiency. Moreover, the potential carbon emission from importing energy resources from other countries might be higher than emission produced due to developing of new oil and gas fields, because of fuel required for transportation.
We don’t have to look far for successful examples. Right across the sea is Norway, which is thriving thanks to new drillings in North Sea. The Norwegian government has got so filthy rich, that it starts to give away money to their citizens as they don’t have other ways to spend them. Also, money from energy sector fuels social, pension and benefits systems, protecting the most vulnerable. Such income might be really handy for potential independent Scottish state, which can fuel the rest of the Europe alongside Norway.
And here we come to reasons why Norway is thriving with its energy sector, while Scottish one is stagnating – the lack of political will and, to be more precise, its abundance in Net Zero direction. While government of Norway doing everything possible to get as much profit as possible from North Sea, Holyrood and Westminster implementing policies limiting potential oil and gas fields development. Moreover, such giants as Russia, China and now US don’t really care about ecology or carbon footprint. The commitment of UK and EU to green policies simply make us weaker in the face of potential confrontation with Russia-China-Iran alliance and even US invasion of Greenland.
Norway has planned more than 40 wells, while the UK, and Scotland, has zero! Norway is receiving around 20 billion dollars in energy sector investments annually, while UK has only 3.5 billion, which is lowest since 1970s. But why is that? Both UK and Norway have so-called windfall tax of 78%. But here is trick – Norway proclaim themselves as long-term, reliable supplier with permanent and predictable tax rate, while UK’s has changed couple of times since 2022. Energy Profits Levy makes investments in Scottish energy sector unattractive. However, this might change, as chancellor Rachel Reeves negotiates to scrap the Windfall tax next year, rather than 2030, to provide long-term investment certainty.
Moreover, Norway motivates potential investors by providing a “cashback” system for energy sector investments. To encourage drilling, the Norwegian government essentially “co-invest”. If a company spends money on exploration or development, they can write off those costs immediately against their taxes. In years where they don’t make a profit (like during exploration), the state even refunds a portion of those costs. On other hand, UK has “Investment Allowances,” which have been frequently reduced or amended.
Nevertheless, any policy changes won’t give desired effect without lifting the licensing ban for new fields. It’s totally understandable the desire of both Holyrood and Westminster governments to reach Net Zero, but again let’s have a look on Norway, where the government is actively exploring new areas in North and Barents seas, viewing their oil and gas sector as a tool to fund their own green policies from sovereign wealth fund. If Norway can do that, why not Scotland?
Why shall we limit our potential, considering such a desperate need for European energy? Scotland, as an independent nation or as part of the union, must drill and receive laurels not as just energy hub of Europe, but as a liberator of European energy sector from Russian and American fuel.
