24 June 2022

What if fossil fuel producers went on strike?


No one likes us, no one likes us, no one likes us, we don’t care! – Millwall FC

The National Union of Rail Maritime and Transport Workers (RMT) are not popular, and they don’t care. That their subsidised industry is in decline, they don’t care. That their strike will cause £100m to £1bn of damage, they don’t care. Their leaders instead demand your solidarity as you struggle to work through their gridlock. Never mind your misery, what about their feelings? They’re only on an wage 70% higher than the national average and they still have to pay for their own travel, well at least 25% of it. Shame on us for our insensitivity.

They, and the other rail unions, are on the other hand extremely effective at doing their job. That is securing and holding onto wages, benefits, and job protections for their members. They strike because strikes work. People join the RMT, despite the communist organisers and agit-prop Marxism, because when it comes to the basics the RMT is a capitalist club that looks after their paying customers.

But what does this have to do with offshore industries, the fossil fuel producers who drill the North Sea? Despite the RMT representing some rig and support service workers, they’re about as unlike the RMT as you can get. They’re represented by a trade body of various business leaders whose idea of militancy is a very stiff letter of concern to the FT. When they were threatened with a windfall tax, they didn’t picket BEIS, but offered to host the Minister at their annual event, while one of their number opined it wouldn’t make any difference. They continued to work seriously with the Government on their offshore transition plan, even changing the name of their trade body to reflect this. They can be heard occasionally agreeing the end of the industry is necessary to ‘tackle the climate emergency’, albeit not yet. This strategy is one of an elderly relative agreeing to dialogue about a pillow on the face.

This has not been an effective strategy. The industry has been stymied by special taxes and regulations, while their payback for responsible cooperation with the Government’s climate strategy was a windfall tax even more extreme than that suggested by the Opposition. Meanwhile their workers, the highly skilled roughnecks and roustabouts who take the offshore risks required to provide the resources that power our economy, have been shafted. Their own pay and benefits which they might reasonably have expected to have been boosted by the massive increase in demand for their services, are going instead towards part-funding a short-term Government publicity stunt on reducing household bills, and cross-subsidising renewables executives benefitting from the same price rises. That is if the tax raises anything at all, the more likely impact is a review of investments, and sharp reduction in new drilling activity over the next few years. A double whammy for the shareholders and workers, and the public too in the longer term, with higher bills, both in homes and at the pump.

Were the oil and gas operators to behave like the RMT the Government would be in serious trouble. There is no prospect whatsoever of the UK being able to substitute the resources it currently secures from the North Sea from the European grids or global markets via the ports. Having treated onshore operators with equal contempt the UK has no back-up fracking plan, and only a few days’ supply in conventional gas reserves. An alternative energy system does not yet exist and will take decades to deploy. Were a group like the RMT representing the North Sea then we might reasonably expect to see the taps being turned off and the rigs shut down. We would see industry leaders reminding us that we need these resources, and their workers are energy heroes keeping the lights on, not climate criminals. They would be indifferent to condemnation and would treat critics robustly. Nor could the Government do very much about this. Replacing station staff, drivers, and signallers with agency staff is one thing, and they’ve failed to plan for even that; running a drilling rig is rather more like landing the space shuttle.

This is not an argument in favour of militancy – the consequences of strife are ruinous for everyone, with lower standards of living and capital flight. But a cautionary note that the Government’s energy cakeism and indifference to cooperation is incentivising such outcomes. If we need oil and gas for the low carbon transition then treat oil and gas as necessary, consistently and fairly in line with other industries. Not as a convenient scapegoat in response to the last difficult headline. Meanwhile if the industry is getting tired of being treated like a piggy bank run by planet haters, it needs to be far less reasonable and far firmer in their dissent from grand plans that won’t work. They need to act like they matter, rather than meekly accepting of submission. They need to be publicly uncooperative and difficult with civil servants and politicians who say one thing and do another, rather than letting them get away with it.

Few will like them for it, but they and their workers may get something better than a pillow as a result.

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Andy Mayer is Chief Operating Officer at the Institute of Economic Affairs.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.