cost of living – Employment, Energy and Environment

North Sea Oil and Gas and the Cost of Living

Report of a public meeting called by ScotE3 on 12^th September

The conversation at this meeting between about 40 people from widely differing backgrounds was both extremely valuable and extremely lively. It’s clear that a lot of people have got their blood up.

The meeting was kicked off by contributions from Neil Rothnie, who has spent much of his life as a North Sea offshore worker, and from Pete Cannell, a founder member of ScotE3. You can watch the video of their talks on YouTube

Three climate activists – Quan Nguyen (Climate Camp), Zareen Islam (Muslim Women’s Association of Edinburgh), and Phoebe Hayman (Just Stop Oil) – were then asked to react to Neil and Pete’s contributions. You can watch the video of their reactions here

Here are some of the points that Neil and Pete made in their introduction

The meeting has been called ostensibly about the cost-of-living crisis and North Sea oil and gas, but if we’re not talking about climate change, we’re not really talking about the real world.
The oil companies operating on the North Sea have a plan to explore for, and produce, every single barrel of oil and gas that exists there. It’s called Maximising Economic Recovery. It’s written into law and has been since way before COP26. And if it’s the oil industry plan for the North Sea, it’s the oil industry plan everywhere. The deal to expedite Maximum Economic Recovery – called the ‘North Sea Transition Deal’ is signed up to by Scottish and UK governments and unions.
Almost all the gas used for heating in the UK comes from the British and Norwegian sectors of the North Sea and comes ashore via pipelines.
Only a very small amount of gas used in the UK ever came from Russia – it came by tanker – and was primarily used for plastic and other industrial processes not for heating.
The huge hike in gas prices came before the war in Ukraine. Gas and oil prices have been highly volatile for many decades. Not long ago the price dipped below zero for a short period.
Liz Truss has confirmed the enormity of the cost-of-living crisis, driven largely by North Sea gas here in the UK, in spectacular fashion by throwing £130 billion at it. Money she’s going to borrow in our name and make us pay back.
The fantasy is she’s going to grow the economy to pay for this. The madness is she thinks she’s going to do it by being cheerleader for the oil and gas industry on the North Sea and by fracking for shale gas in England.
The reality either way is that is she is going to try and make the people pay.
Truss treats the global market price for gas as if it is God given. The price bears no relation to how much gas costs to produce. It’s set by speculation (by hedge funds) betting on what the price might be at some point in the future.
There’s been no significant increase in the cost of gas production on the North Sea.
The finances of the poorest, the most vulnerable, those with special needs, are stretched to the limit by the price hikes that are already in place and would have been wrecked immediately by the October rise had it gone ahead as planned. The Truss decision to freeze energy bills for the next two years is not some sort of act of charity or generosity, but an admission that to proceed with the planned rises in retail energy prices till they met the wholesale energy price levels that profiteering by the gas producers and electricity generators and the market speculators have engineered, is just not acceptable. The people after years of austerity and real wages reductions, just could not, and would not, shoulder this burden.
The £130 billion package, even if the plan is that we eventually pay for it somehow in energy bills over the next 10 years, is a kind of a victory. At the very least it gives us the breathing space to begin to build a response in the communities. But that is still urgent.
Had the October cap rise gone ahead it is likely that catastrophic levels of poverty would have been the result and that local communities would have been faced with a couple of immediate challenges. How the most vulnerable were to keep warm? How they were to stay fed? These challenges have been at best delayed for many people but are still present for many already on prepayment meters and are likely to be unable to heat homes effectively or afford inflated food prices this winter.
The people of Pakistani heritage living in Govanhill and Pollokshields have watched as their families, friends and erstwhile neighbours in about a third of the districts and 12% of the land surface of Pakistan are devastated by floods which even the Government of Pakistan, recognises are a direct result of global warming driven by fossil fuel burning. Fossil fuel burning specifically not by most of the victims.
While trying to raise aid for the victims in Pakistan, this part of our community is facing their own fossil fuel induced crisis, a cost-of-living crisis that threatens to drive them into cold and hunger and which is driven by profiteering on North Sea gas.
The extraction of megaprofits from the North Sea is driving the current cost of living crisis. Longer-term Truss’s ‘payback plan’ and the government’s plans for Nuclear, Hydrogen for heat and fracking will ensure a high-cost energy future and continue to trash the environment.
A sustainable future requires breaking the power of the big energy companies on the North Sea, and through democratic public control phasing down production, ending the subsidies and shifting all that investment into renewables.
When they shout – It’s the war in Ukraine. We’ve got to shout it’s profiteering on North Sea gas.

You can watch a full video of the introductory talks here

And here is an attempt at summarising the general discussion which followed:

Actions we can take immediately

Most people don’t understand what’s happening. We need to get out into the streets with leaflets and speak to people – which is the key strategy of Just Stop Oil.
We should speak more about our ideas, and less about ‘theirs’.
A good talking point is the recent worst flooding ever in Pakistan. At the same moment when Pakistani families living in Scotland were watching their relatives dying on the news, many of these families, for example on the south side in Glasgow, are facing the impossibility this winter of both keeping warm and having enough to eat. Both these disasters are a direct result of the world continuing to burn fossil fuels as its main source of energy.
We need to keep expressing our solidarity with the people of the global south who are enduring the worst effects of global heating.
The power of the big North Sea oil and gas companies, through lobbying, bribery and their control of the media, is huge. This is a war we’re fighting, not a battle.
Beware these companies as they begin to invest in renewables. If we allow ourselves to be fooled by this they will make sure that renewables are developed in a way which is most profitable for them instead of prioritising public benefit.
We need to fight for state ownership of not only distribution of energy but also its production.
The processing plant at Mossmorran must be shut down.
One participant suggested that we should get into the Labour and LibDem parties and make the politicians listen to what we have to say.
We should organise for COP27 (to be held in November at Sharm El Sheik, Egypt).
At the same time as addressing the big political picture, we need to provide support for the many people in our communities who will be in desperate need this winter – for example by setting up ‘Warm Banks’, as communities in North Edinburgh are planning towards.

Workers and Unions

The unions need to come together with the workers, demanding with a single voice no more fossil fuel extraction and just transition for the workers.
There will be no pay and no jobs on a dead planet
We should go to picket lines to express solidarity and not be afraid to speak about the big picture, whatever immediate demands the strikers are making. For example whatever RMT workers immediate demands, they are the people who will be running the electric trains to get people out of their cars.
On October 1^st we should be on the streets to support the BT group workers and their Communication Workers Union
We should particularly express solidarity with the current wave of wild-cat strikes by the North Sea offshore workers, especially in view of their Unions’ criticisms of their strike action. The work conditions of these workers are appalling,

Our rulers

Do not care about us
Are under the control of the big oil and gas companies
Deserve our anger

Hopeful considerations

Working together: one participant talked about ‘joining the dots’ – another suggested a good way of doing this is by supporting RMT pickets and making sure that climate and supporting public transport is part of the agenda; critical to make the links between organised workers and communities – the Edinburgh Trade Unions in Communities initiative is a good example. It was noted that the anti-fracking campaign went well because of solidarity across Scotland and England. So, the theme across these is about connecting, working together for greater impact.

There are now the beginnings of widespread collective action
The North Sea is at an end-game stage, with reducing quantities of oil and gas to extract, and the prospect of rising costs of extraction.
Two years ago, Platform ran a questionnaire for offshore workers which showed many hadn’t even heard about just transition, but that most would gladly move to jobs in renewables if they were given the opportunity.
One participant pointed out that when fundamental daily needs like warmth and food are being denied to large numbers of people, history tells us that revolution is likely. Other civilisations have fallen in similar circumstances.

Upcoming meetings

A number of events were mentioned during the discussion go to our Events page for details.

Oil, gas and the cost of living

This post by Neil Rothnie was written as a letter to the Herald newspaper but the Herald declined to publish it

It’s North Sea gas price increases that are largely responsible for the cost of living crisis, making energy bills unpayable for growing numbers of people.

90% of the gas we use in our homes comes from the North Sea. Wholesale gas prices were soaring well before Russia invaded Ukraine. So far Ukraine and Russia have collaborated to keep most Russian gas flowing to Europe and finance both sides in this war. There have been no power outages or gas shortages in the UK or Europe.

North Sea gas price increases have not been caused by rising costs of production. There have been no wage increases for oil and gas workers, and no new pipelines or gas platforms built.

So what are the sky high gas prices all about? Supply and demand? Prices pushed up by a global shortage? China, Japan and India, where it is claimed that there are gas shortages, can’t access North Sea gas however much they’d be prepared to pay for it. There are not the facilities in Europe to liquify North Sea gas and there is not a fleet of empty LNG tankers waiting to transport it to Asia.

The oil companies either sell North Sea gas to us at prices people can afford or they drive consumers into cold and hunger. The choice they have made is clear. Profits of Shell, BP and Total in the first 3 months of this year are colossal – £7.5, £5 and £4 billion respectively.

Ordinary people can’t and won’t go on indefinitely paying for oil company profiteering. We can’t just live with the gas and electricity disconnections that are the inevitable result of unaffordable bills. Already Just Stop Oil and Extinction Rebellion are justifiably on the streets engaged in civil disobedience aimed at the oil and gas industry. Far more widespread civil disobedience is surely inevitable as people respond to cold and hunger. Remember the Poll Tax?

Manipulating gas markets to impoverish your customers can’t in any way be described as a “windfall”. It’s an unprovoked and deadly attack by an industry whose time has passed, and a one-off tax won’t cut the mustard.

The plan to slash civil service jobs to free up the cash to meet the cost of living crisis is a perverse response. The industry needs to be taken out of the hands of our own oligarchs. The oil and gas that will have to be produced in the short term, needs to finance the transition that will allow us to stay warm in our homes, and the planet to stay cool enough to remain habitable. We need a plan to insulate our homes properly, and massively expand wind and solar generation to heat and light our homes in a way that doesn’t feed the climate crisis.

This is the opposite of the current oil industry/Government plan to Maximise Economic Recovery of North Sea oil and gas, ie, to produce and burn every barrel of hydrocarbon they can turn a profit on – business as usual.

Briefing #14: Climate, fuel poverty & the cost of living

Briefing #14 on climate, fuel poverty and the cost of living is now available for download. As with all the our briefings you are welcome to use and adapt the briefing content – attribution to https://scote3.net is appreciated.

The content of the briefing is reproduced below.

Climate, fuel poverty & the cost of living

Fuel poverty kills

Prior to the latest crisis almost 25% of households in Scotland lived in fuel poverty and just over 12% were in extreme fuel poverty. Households in extreme fuel poverty are disproportionately represented in rural Scotland. Older people living in rural Scotland are particularly hard hit. Every year thousands die because of fuel poverty – in 2018/19 excess winter mortality (that’s in comparison with the average winter mortality for the previous five years) was 2060 – the death toll can be more than twice as high in cold winters. Around 85% of households in the UK rely on gas for heating and cooking. The huge hike in gas prices is going to make an already unacceptable situation much, much worse.

Rising fuel prices

Gas and electricity prices have been rising faster than inflation for a long time. From 2006 – 2016, Gas prices rose by 71% and Electricity 62%. Between 2017 and 2020 electricity prices increased by a further 8% in real terms while gas prices fell by a similar amount. But gas prices are extremely volatile. Since 2019 the wholesale price has almost trebled.

Gas consumption fell by just over 2% in 2020, a consequence of lockdowns around the world. In 2021 there was a rebound with consumption increasing by 4.6% because of increased economic activity and several extreme weather events worldwide. The cost of producing gas is about the same this year as it was last year and the year before. So why has the price rocketed up? Prior to 1987 the EU designated natural gas a premium fuel that should be reserved for home heating. Now 60% of gas is used to generate electricity. Britain used to have significant storage capability. This was abandoned in favour of allowing the market to deliver gas as needed. These changes have been a disaster. Gas is traded on the spot market with hedge funds gambling on future prices. As a result, the cost of an essential utility is determined by a casino where traders rake in massive profits while consumers pay the price.

Lack of ambition

In June 2019 the Scottish Parliament passed a new act setting statutory targets for reducing fuel poverty. Rightly it highlights the impact of fuel poverty on the most vulnerable in society. Low-income, high-energy costs, and poorly insulated housing result in the appalling situation where families, young people, elderly, disabled and many working people, cannot afford adequate warmth. The new act sets interim targets for reducing fuel poverty to 15% of households by 2030 and final targets for 2040. Considering the cost of living and climate crises we face this is too slow and not enough. The act failed to address the threat posed by a chaotic market. From April 2022 annual bills will increase by an average of almost £700. Further increases are expected later in the year. The numbers in fuel poverty are set to rise well above the current level.

Fossil fuels cost the earth

Both Holyrood and Westminster remain committed to the maximum economic extraction of oil and gas from the North Sea. The big energy companies are making billions in extra profits out of the crisis. North Sea oil and gas operates under a regime of very low taxation. With prices high companies will be doubling down on plans to open new gas fields. If this happens there is no chance of meeting the reductions in greenhouse gas emissions that are essential. We argue that there are two essential steps. The first is to protect all those who are in fuel poverty and stop more people joining them. A windfall tax on profiteers will help with this but should not be mistaken for a long-term solution – and the scale of the problem is so large that it requires significant redistribution with higher taxes on the rich and much more support for the poor. These are necessary short-term steps to prevent large scale misery, deprivation and increased winter deaths. But a secure future for us all rests on gas being taken out of the market, with North Sea and North Atlantic oil and gas taken into public ownership and control. With public control it then becomes possible to plan for the phase out of fossil fuels from the North Sea. In the process we cut greenhouse gas emissions and replace expensive gas heating by cheaper renewables. The interests of working people and the need to protect the planet are aligned.

A mass insulation campaign

In its ‘One Million Climate Jobs Pamphlet’, the Campaign Against Climate Change (CACC) notes that

Three quarters of emissions from houses and flats … are caused by heating air and water. To reduce this we need to insulate and draught- proof the buildings, and replace inefficient boilers. This can cut the amount of energy used to heat the home and water by about 40% and delivers the double-whammy of reducing energy costs and helping mitigate the scourge of fuel poverty.

Based on these CACC estimates, which are for the whole of the UK, a campaign to properly insulate all homes in Scotland would employ around 20,000 construction workers for the next 20 years. This doesn’t account for additional jobs in education, training and manufacture that would spin off from such an endeavour. Through this carbon dioxide emissions from homes would be cut by 95%. We could ensure that all new houses are effectively carbon neutral. The technology exists – there are examples of ‘passive houses’ that use very little energy. Insulation together with the steady replacement of gas boilers by affordable heat pumps is the solution to cutting the energy demands of domestic heating. Hydrogen is not a solution (see Briefing #13).

New Technologies

The current costs for fossil fuel power range from 4p -12p per kilowatt-hour. Inter renewable energy agency (IREA) state that renewable energy will cost 2p – 7p with the best onshore wind and solar photovoltaic projects expected to deliver electricity for 2p or less. Renewable energy is necessary for a sustainable future, and it is cheaper than fossil fuels. Current Westminster Government policy – notably the subsidy ban for new onshore wind farms – is impeding the shift to renewables.

No Fracking

For the moment fracking is off the agenda in Scotland. The result of a magnificent campaign of resistance. But INEOS continues to import fracked gas from the US. This has to stop.

In conclusion

Fuel Poverty and the cost-of-living crisis are the direct result of the “wrecking ball” of market forces dominating our need for energy to give us warmth, light and sustenance. In the pursuit of profit, the use of fossil fuels adds to the catastrophe of climate change.

We have the technology and skills to stop this madness and misery through a radical shift in Energy policy that would combine sustainable and renewable resources dedicated to social need. Tackling climate change would go hand in hand with creating additional jobs, eliminating fuel poverty, and improving health and well-being. To make this happen we need the kind of focus and the level of investment that has only normally applied at times of war. Ending the use of fossil fuels over a short period is practically possible provided there is the political will.

Some of the material in this briefing also appears in Briefing #7 – Fuel Poverty

About Scot E3

Scot.E3 is a group of rank and file trade unionists, activists and environmental campaigners. In 2107 we made a submission to the Scottish Government’s Consultation on a Scottish Energy Strategy. Since then we have been busy producing and sharing leaflets and bulletins.

We believe there is a compelling case for a radical shift in energy policy. Looming over us there is the prospect of catastrophic climate change, which will wreck the future for our children and grandchildren.

We have the knowledge and the skills to make a difference to people’s lives in the here and now. A sustainable future requires a coherent strategy for employment, energy and the environment. We need a sense of urgency. We need a coordinated strategy and massive public investment.