Dennis the Menace – an SNP MSP surveys the oil industry

dennis robertson on oil 5 1 2016

The Scottish parliament first met after its Christmas Year recess on 5 January. Amidst all the ‘Happy New Year’s and (sort of) bonhomie Dennis Robertson, SNP MSP for West Aberdeenshire, made the statements above, taken from the parliament’s official record. If you haven’t noticed, he’s had some stick for it in the Scottish media and has since apologised (again, sort of) for his choice of words and for being misunderstood. So the fault really lay with the words rather than the thoughts and with, er, those doing the misunderstanding.

Not so, his words were quite clear. And quite wrong – on three of his four points.

First, he said, ‘There is no crisis.’ Now, you can play with the meaning of words and we shouldn’t exaggerate. But the Oxford English Dictionary defines the word crisis as

A vitally important or decisive stage in the progress of anything; a turning-point; also, a state of affairs in which a decisive change for better or worse is imminent; now applied esp. to times of difficulty, insecurity, and suspense in politics or commerce.

I think the state of the UK offshore oil and gas industry could be said to fall somewhere within that definition. Two of my neighbours in Aberdeen who I discovered at Hogmanay had been made redundant, albeit on generous terms, would think so. One said, ‘I took a package to go, thinking I’d walk straight into another job. Seven months later I’m still looking.’ For several years the oil price was above $100 a barrel. Today Brent crude is trading at $34.48 a barrel. The whole industry world-wide has been affected but the higher cost offshore oil provinces have been hit hardest. And for the North Sea, and the Aberdeen area, that means the expertise and labour they have to sell world-wide is just not in demand. Anywhere.

Second, Mr Robertson said ‘We have just extracted more oil than ever before in the North Sea.’ This is complete and utter nonsense. No shilly-shallying about a poor choice of words can disguise the fact. Here’s the graph I’ve used before showing UK oil and gas production:

oil and gas production

There may be some upturn and production has fluctuated more recently. But the peak was reached in 1999. It will not return.

Third, he said the industry is ‘booming.’ I won’t go through a charade of repeating the dictionary definition of booming. But trust me, the government, the industry and every commentator under the sun, it isn’t booming. If you want a balanced view of its situation have a look at the industry’s own Oil and Gas UK Economic Report 2015. The foreword says:

This great industry of ours is facing very challenging times. The UK Continental Shelf (UKCS) has seen four successive years of record investment, but the return on that investment is being severely undermined by acute cost inflation. Last year, more was spent on UK offshore oil and gas operations than was earnt from production, a situation that has been exacerbated by the continued fall in commodity prices. This is not sustainable … (p.5)

The one thing Robertson was spot on with was his statement that ‘We have the most skilled workforce in the North Sea.’ The cynic might add ‘Well, he would say that wouldn’t he, since he’s talking about some of his own constituents.’ But let’s give him the benefit of the doubt. The danger of course is that the longer the downturn continues, the more the talent will leach away to other industries and other countries.

If you’re not familiar with Mr Robertson’s constituency of West Aberdeenshire you might imagine a sleepy rural backwater with a bit of tourism on Royal Deeside and some marginal farming stretching up into the Cairngorms, far away from the hustle and bustle of Aberdeen. You’d be wrong. It extends on its Eastern side to Westhill, in effect a detached suburb of Aberdeen, which is awash with oil and gas companies. Other towns and settlements – Banchory, Blackburn, Kemnay and others – all have numerous oil and gas-related businesses. And residents from thoughout the whole area commute daily to Aberdeen for work and for longer periods to most places in the world where you can find offshore oil and gas.

Mr Robertson seemed to know or remember little of all this when he made his short and uninformed intervention in parliament a couple of days ago. It will be interesting to see if his constituents, rather more of them than now perhaps redundant by the time of the Holyrood election in May, remember his unfortunate words. No doubt his political opponents will remind them.

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One Response to Dennis the Menace – an SNP MSP surveys the oil industry

  1. Island Girl says:

    The art of deflection has clearly reached new heights! So it is our fault for misunderstanding what was said rather than what was meant 😳 It’s going to be an interesting run up to the elections in May!

    Like

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