Tuesday, 12 January 2010

What If the UK had Handled the 'Oil Shock' of the 1970s Differently?

This is not really a counter-factual more a discussion about energy policy.  As had been foreseen on the drama series 'Spooks' at the end of 2009, the UK has been facing a shortage in its supply of fuel, primarily because the country is so dependent on imported gas.  Half of the gas the UK uses is imported and gas burning provides 40% of the UK's electricity.  The concerns that have been rising in Britain, at least since 1956, if not since the 1910s when the Navy became interested in oil supplies from what was then Persia (now Iran), regarding 'fuel security', seem to have been neglected in recent years and so have left Britain very vulnerable to increased demand or any disruption in supply.  In the past the concern was whether the oil could be obtained safe from Great Power rivals, Cold War rivals or local nationalists or religious fundamentalists.  Some of these issues remain and to some degree warming relations with Colonel Gadaffi are about securing short haul oil for western Europe just as US intervention in Iraq, reassurance of Saudi Arabia and dismay over the Chavez government in Venezuela has been concerned with oil supplies to the USA. 

Back in the 1970s it appeared the UK would be exempt from worrying about securing oil from uncertain regimes in Africa (not just Libya but also Nigeria), the Middle East and South America because oil and gas was found in large quantities in the North Sea.  Whilst it was difficult to access, the rise in oil prices from 1973 onwards certainly made it economically viable.  The peak production was in 1999 at 6 million barrels per day but now has fallen to 1.9 million barrels per day and in 2007 the UK became a net importer of oil for the first time since the 1960s.  Oil-burning power stations only contribute 1% of UK electricity but oil is vital for powering vehicles.  Gas production remains high at 280 billion cubic metres in 2001 and is increasing, but the amount extracted by the UK compared to the Netherlands is falling and instead imported gas (making up 50% of UK supply, up from 27% in 2007) is being used.  It is estimated that since large scale North Sea oil extraction began from the mid-1960s onwards half of all the reserves in the North Sea and neighbouring sea regions has been removed. Of course, unlike Norway which has a population of only 4.7 million (and where, despite its oil 99.3% of its electricity is generated by hydro-electric plants), the UK with about twelve times as many people has not seen a rise in the standard of living and in fact the boom years in oil production in the 1980s coincided with periods of sharp industrial decline and mass unemployment.  In addition, the privatisation of BP the previously state-owned oil company in parts between 1979-87 meant that the profits went to shareholders rather than the British state just at the first peak of production which came in 1985.

Of course, in terms of generating electricity rather than powering vehicles, the UK should not need to worry for centuries to come.  When the bulk of British coal mines closed in the mid-1980s the UK still had reserves of coal that could have lasted 300 years.  However, it was comparatively expensive to extract compared to cheap Polish and Australian coal and prime minister Margaret Thatcher anyway wanted to smash the coal mining workforce as an element in British society.  In addition, there is a newish factor which is the concern regarding carbon dioxide pollution connected to the warming of the climate which predicates against power stations burning fossil fuels.  Coal burning still provides 33% of UK's electricity and there has been discussion of new coal-fired power stations to fill the UK's gap in power.

Britain has long flirted with nuclear power, with its first commercial power station being built in 1956.  Currently 20% of UK electricity is generated by nuclear power stations (3% of it by French nuclear power stations and imported via cables under the English Channel) all of which will be decommissioned by 2035, all but one by 2023.  By 1988 nuclear power was increasingly seen as too expensive and dangerous to be viable and with electricity generation privatised in 1989 there seemed no point in the government investing in nuclear power any longer, the last nuclear power station was Sizewell B started up in 1995.  Up until 2003 the British government was reluctant to build more nuclear power stations due to the dangers of leakages and the waste they produce.  However, from 2006 onwards, looking for ways to have power generated in ways that did not increase carbon dioxide, they came back in favour in policy and 10 nuclear power stations have been planned for 2019-25 were announced in November 2009 providing 25% of UK electricity, but not starting for almost another decade.  France has always been a greater enthusiast for nuclear power despite generally easy oil resources coming the short distance from Algeria even after that state cease being a French colony in 1962 and now 78% of France's electricity comes from nuclear power (11% from hydro-electric) and some of this is exported.

Hydro-electric power is interesting.  Some states who have fossil resources, such as Norway, Canada (where 61% of power is hydro-electric, i.e. HEP), Venezuela (67% HEP) get a lot of electricity from hydro-electric, other big users are Sweden (44%) and Brazil (86%).  Britain has been building hydro-electric plants since the 1930s but they only contribute to 1% of UK electricity less than biomass and wind methods which provide 3.5% at present.  Globally HEP provides 20% of the world's electricity and it is estimated that a third of potential sites have been used.  It seems ironic that even heavily nuclear France has more power from HEP than the UK.  HEP does not necessarily need mountain valleys, many French rivers have HEP installations on them.

Given that fuel, power and energy are all up for discussion now, why do I hark back to the 1970s?  This is because I feel that this was the time when the UK had its first real shock around its energy supply and could have taken steps to secure it, not only in political terms but in moving towards more sustainable, less polluting sources.  The so-called 'oil shock' hit the Western world in 1973 when Organisation of Arab Petroleum Exporting Countries (OAPEC - Algeria, Bahrain, Egypt, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, Syria, Tunisia and United Arab Emirates; 'radical' Algeria, Egypt, Iraq and Syria had just joined in 1972) announced in October 1973 an oil embargo on states seen as backing Israel in the Yom Kippur War of that year.  This was an extension of the policy of oil embargo imposed for a short period in summer 1967 in response to supposed US and British involvement in the Six Day War of that year.  In 1973 this affected the USA but also impacted on the Netherlands, Portugal, Rhodesia and South Africa depending on individual states' policies.  The broader impact even for countries not embargoed was a 70% increase in the price of oil anyway, seen as effectively ending the post-1948 economic boom, though this had begun to slow from 1971 onwards and the US stock market suffered a crash for almost all of 1973 and 1974.  By the end of 1974 oil was four times its pre-October 1973 price.  For the second time in six years, Britain had had its oil supplies from the Middle East threatened.  Whilst this encouraged the British to look at new supplies such as from Nigeria which had been a British colony until 1960 though it was just recovering from the 1967-70 civil war, from Canadian oil shales, from the North Sea and through alternative power sources.

The second 'oil shock' caused by the Iranian Revolution of 1979 and the subsequent Iran-Iraq war had an immediate impact but this was comparatively short lived as during the mid to late 1970s oil supplies had been diversified, many Arab states increased production and Venezuela, Mexico and Nigeria were able to expand their production to fill the gap left by the loss of much of the Iranian and Iraqi supplies and by 1980 the oil price went into a slump lasting until 1986.  The 1979 crisis raised oil prices sharply in the USA and threatened rationing.  The UK was less affected because North Sea oil had increased in quantity of supply over 1973/4.

The UK had had additional 'shocks' from its domestic politics.  The rise in the price of coal as an effect of the oil price rise, rising inflation in the UK in 1972-3 in part provoked by an era of prosperity and consumption (1974/5 was to see the highest level of sales of cars in the UK that had been yet seen) and by the knock-on effects of oil price rises (which, for example made plastics more expensive) led to work-to-rule and then strikes by coal miners leading to fall in coal supplies which at the time was the main source of fule for generating electricity.  From December 1973 to March 1974 a three-day week was run meaning electricity was only available for industry for three days of the working wait and there were power cuts at other times; television stopped broadcasting at 10.30pm, which given that it usually went off air sometime before midnight most days (and sometimes in the middle of the afternoon too) when there was normal electricity supply was less of a change than it would be nowadays with 24-hour television broadcasting.

In the 1970s, especially from 1973, there was naturally interest in moving away from the consumption of coal and oil to more sustainable supplies that were not dependent on foreign governments.  For a small country, the UK was at the leading edge of wave power development with Stephen Salter and Michael French ranking alongside US, Norwegian and Chinese scientists in developments.  At a popular level I remember programme after programme about developments of wave power devices of different sorts, notably 'Salter's duck' formally known as the Edinburgh Duck after his university, those that bobbed on the waves.  Other designs aimed to use the force of waves coming into shore.  Of course, the UK had a history of tide mills; there were 6000 across England as early as the 12th century.  One from the 8th century has been found in Northern Ireland and a Roman one may have been found on the River Fleet in London.  One found recently at Greenwich in East London had a wheel of 5.2 metres in diameter and was constructed of wood felled in 1194; tide mills were still in use in the 19th century.  Given the extensive coastline the UK would seem a suitable place for wave power now as it was eight centuries ago.  It has come to light that the UK Wave Energy Programme was closed by the UK government in March 1982, not surprising given that Margaret Thatcher has never appeared a fan of sustainable energy perferring to favour profiting her friends in the oil multi-nationals.  Salter's model was very energy efficient, but needed large scale investment to be put into practice.  However, other designs around at the time were similarly shelved.  The fall in oil prices in the 1980s seemed to make them unnecessary.

The first windmill to generate electricity in the UK was built in 1887, yes, 1887, not 1987.  As I have noted before in the 18th century the UK had hundreds of windmills in every county.  Developments in wind power especially in Denmark and the USA continued through the 20th century.  Again it was the oil shocks of the 1970s which stimulated even the huge fossil fuel consumer the USA to begin taking the approach seriously.  However, it was not until 1991 that the UK got its first onshore wind farm and 2003 its first offshore one.  The lateness of this was because it was only in the face of pressure of carbon dioxide emissions (commonly called 'carbon footprint', in fact though carbon particulates pollute the atmosphere this cools the global temperature, it is the emission of carbon dioxide following the burning of hydro-carbons, what make up fossibl fuels, which is what is contributing to global warming) that government funding went into such initiatives.  There are now £75 billion of contracts to build windpower facilities around the UK, but the bulk of the tendering companies are dominated by German firms.  This is unsurprising as after the USA, Germany has the second largest number of wind farms of any country in the world as anyone driving down as German motorway in recent years will know.  There seems to be less issue there with locals refusing to have them and it seems sensible to put them alongside motorways which would already be considered an eyesore.  Again, back in the 1970s the British were looking at wind farms.  Along with Denmark, a leading advocate, we had joined the EEC from EFTA in 1973.  Designs such as the vertical wind turbine from the UK company Alvesta were certainly being publicised in the 1970s but again it needed another 30-35 years before any steps were taken.

Of course, sustainable energy does not mean ending use of hydro-carbons and biofuels are a form of hydro-carbon that is sustainable but is still troublesome in terms of carbon dioxide production.  Again in the 1970s biofuels were seen as a solution, though back then we did not know that recycling fat from chipshops would do the trick if properly processed.  Given how much more fried food the UK consumed in the 1970s it would have been a rich source.  Biofuels such as the use of ethanol, hemp and peanut oil have been around since the late 19th century and biodiesel mixes were in common use until the1920s.  Biofuels are seen as balancing the carbon dioxide situation because plants absorb carbon dioxide, though I and many argues that burning any hydro-carbons worsens the situation unnecessarily, but yes, biofuels have less overall impact than fossil fuels.  The other key problem with biofuels is that they now tend to be grown in regions where growing enough food is a problem.  The world can produce more than enough food to feed the entire population, as the mountains and lakes of food stored by the EEC in the 1970s and 1980s showed.  However, economically big business makes more money growing such fuels in places with cheap labour.  In the 1980s, with the EEC countries being dependent on imports of food oils they promoted the cultivation of rape seed which can be crushed to produce oil.  This policy was incredibly successful changing the UK arable landscape entirely and you now see field upon field of this bright yellow crop.  The UK along with many other EU states was producing 'too much' food and so adopted policies like 'set aside' paying farmers to leave fields fallow.  Instead it could have developed a biofuel industry on the back of the rape seed and sugar beet that grow in so much of the UK.  This could have started in the 1970s and made the UK have 'fuel security' at least for powering cars and lorrie.  Part of the problem is the reluctance of the British public to engage with non-standard vehicles, which is ironic given our steering wheels are on the opposite side of the car to most in the world.  Hybrid vehicles are in place for those reluctant to move entirely to move away from petrol or diesel.  Hybrids with electric propulsion have been around more than twenty years.

The UK, like many Western countries, had the opportunity to respond positively to the oil shocks of the 1970s in developing better fuel and energy policies.  However, once the immediate threat was over they simply let these developments slide.  Partly, I imagine, this was because multi-national oil companies are immensely wealthy and incredibly influential.  As we saw in the USA in response to the Kyoto Agreement, lobbying from the fossil fuel sector is far more powerful than that from environmentalists or even specialists favouring fuel alternatives.  Oil companies like the wealth they have and like a drugs dealer will push hard to make sure that we remain addicted to their product and keep paying them for it.

The UK, in particular, allowed its leading position in such developments to go to the USA and to Germany.  In many ways I wish that the OAPEC action had gone on longer to the extent that the oil companies actually began to feel the pinch.  They shifted sources and traded internally and among themselves.  Though oil companies always whine when supply prices rise, in fact they always come out of these things very successfully.  However, if the prices to the consumer had persisted at a high level for longer, then governments may have persisted with pursuing the alternatives to oil and coal which seemed to be the future in 1973.  The advent of New Right governments, wedded to big business did not help this.  As a result, rather than steadily moving into sustainable energy in the 1970s to an extent that by the 2000s the UK's carbon dioxide levels would already be lower, we kept on giving away our advantages and ignoring the methods our scientists and technologists had developed.  We even ignored easy gains such as biofuels. The UK probably got North Sea oil at the wrong time.  If we had not found it until the 1990s then we would have used it more sensibly and not allowed it to blind us to the other developments we could have pursued.  The UK is now incredibly vulnerable in terms of fuel security, highly dependent on imported gas and is also weak in meeting carbon dioxide emission targets and so is rushing with little thought into any feasible route, such as new nuclear and even new coal-fired power stations.  The public resistance to wind farms is insane, but the people who resist their construction will have to put up with the nuclear powered stations built instead.  I know which of the two I would prefer in my back garden.  I fear that faced with challenges in terms of fuel and energy the UK will continue to simply stick to 'business as usual' for as long as it can rather than properly engage with better, safer approaches.

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