Why UK should follow Norway's example to protect itself against global oil price crises
Norway produces large amounts of oil and gas but also has high numbers of electric vehicles and heat pumps
With the Iran War sending oil prices skyrocketing, concerns the world may soon face an energy crisis like the one sparked by Putin’s 2022 invasion of Ukraine are growing.
Then the UK Government spent £40 billion helping bill-payers, but the question now is whether the country can afford to do something similar so soon again and also what would happen if we did not.
According to Keir Starmer, the UK is working with its allies to ensure oil tankers can travel through the Strait of Hormuz without the threat of being blown up by the Iranian regime, whose attitude towards civilian casualties – including those in and from countries that are not attacking them – speaks volumes.
Cut demand, not supply of fossil fuels
We hope this plan succeeds. However, there is a way that the UK can minimise the damage to its economy from energy crises in the longer term, while also increasing government revenues, boosting job creation and fighting climate change.
Many environmentalists campaign for a reduction in the supply of oil and gas. At a time when there is still considerable demand, this is a mistake that would risk economic chaos and does not represent a viable path towards net zero. As we said yesterday, we do not have to destroy the oil industry to grow our renewable sector.
Instead, the UK should focus on reducing domestic demand by decarbonising and modernising the economy, with our oil and gas being increasingly exported.
That way, oil price spikes would increase the tax revenues raised from the North Sea and the profits of companies, which might then decide to invest more in the energy sector as a whole.
Norway provides a good example. It produces large amounts of fossil fuels, but also has high numbers of electric vehicles and heat pumps. As a small country, it’s far from immune to global economic crises, but the damage is reduced to a degree.
The UK should try to do something similar and get as close as possible to the best of all worlds: an increasingly modern, prosperous and low-carbon economy that is resistant to oil price shocks caused by events in faraway lands that are beyond our control.
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