Opinions

Alaska isn't the only oil province over a barrel

Oil prices in 2015 have been half or less the prices Alaskans enjoyed in 2014. Since the beginning of February, Alaska North Slope crude has consistently sold for less than $57 a barrel.

Alaskans are in trouble, but they are not the only ones facing economic dislocation.

The Guardian newspaper recently published an extensive analysis of what Britons -- and particularly the Scots -- can expect from lower North Sea oil prices.

Here's the nut graph from the two-page spread. "The huge fall, which would take tax receipts to their lowest level since the earliest days of North Sea oil production in 1975/76 will result in North Sea oil and gas taxes worth 9.6 billion (pounds) less than the (Office for Budget Responsibility) predicted in December over the next five years."

In response to this grim prediction, the Conservative Party government of David Cameron has announced 1.3 billion pounds (roughly $1.9 billion at present) in tax and investment incentives to stimulate new exploration and development. The incentives are controversial and are denounced by the left as giveaways to the oil industry.

During last year's referendum on Scottish independence, advocates of separation maintained that their new country could finance itself largely with oil revenue. The Guardian reports that the latest forecast for 2016-2017 suggests Scotland will receive a tenth of the oil receipts predicted during the recent campaign. (For Scots who think they need a drink after hearing this news, the Cameron government announced the first reduction of the whiskey tax in two decades).

The Guardian says the North Sea oil fields' problems began long before the swift price decline. "Aging oil wells mean production has been in decline for 15 years, while the industry is drilling fewer new wells than at any time since of North Sea oil ..."

ADVERTISEMENT

U.K. offshore oil and gas employs about 375,000 people, the Guardian notes. Consultants quoted by the newspaper suggest 10 percent of their jobs could be lost over the next five years.

A reporter who visited offshore workers and spoke to a union official representing 5,500 workers said she was told these men must now work three weeks for the pay they previously received for two weeks. (An Alaska reader wonders if this is true. Will workers in a democracy work one week out of three for nothing to keep their jobs?)

Optimism was in short supply in The Guardian's pages. Sir Ian Wood, billionaire founder of an oil-field service company, said the long-term decline in oil production means Aberdeen, capital of the North Sea oil province, "needs to do a lot in the next 10-15 years to plan for a city without oil."

If Aberdeen becomes a city without oil, perhaps it will have a sister city in Alaska.

Michael Carey is an Alaska Dispatch columnist.

The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)alaskadispatch.com

Michael Carey

Michael Carey is an occasional columnist and the former editorial page editor of the Anchorage Daily News.

ADVERTISEMENT