The UK’s revenue from oil and gas has plummeted by 54 per cent in the space of a year from £4.7bn in 2013-14 to just £2.1bn in 2014-15 as world oil prices continue to drop.
The fall is more than double that of the previous year, when revenue fell by 24 per cent from 2012-13 to 2013-14, with the figure now a long way from the high of £10.9bn in 2011-12.
The revenue comes from a variety of taxes on the oil and gas industry in the UK and naturally depends on how much money the industry makes, with the Office for National Statistics (ONS) explicitly blaming the drop on “falling oil prices” – and the reason they are falling is the self-interest of oppressive regimes in trying to undermine fracking.
Oil prices had been steadily dropping for some time thanks to the U.S. shale boom flooding the market. The ease and efficiency of fracking, combined with the abundance of shale oil, means that those who have been brave enough to adopt the extraction method have been richly rewarded.
Now, fearing for their economies – and ultimately their very survival – member nations of the oil cartel OPEC decided to fight fire with fire.
In an audacious gamble, they upped production and forced the price down even further in the hope they could bankrupt the fledgling U.S. fracking industry before inflicting too much damage on themselves.
Leading OPEC members include Saudi Arabia, Iran, Qatar and Venezuela – states that depend almost entirely on oil revenue to fuel their economies.
However, there are now signs they may have failed. Last month, a draft OPEC report said that producers outside the cartel, including American shale firms, will increase production “until at least 2017” suggesting they are anything but defeated.
It is now clear that the cost of fracking is considerably less than OPEC had hoped, with shale wells relatively easy to operate, meaning that the American firms may ultimately emerge victorious.
In the midst of this dispute, the UK’s revenue from this industry continues to fall.
One group who will find it particularly jarring are the Scottish Nationalists, who wildly over-estimated the value of North Sea oil during last year’s independence referendum in order to prove Scotland’s economy could survive outside the UK.
While prices may rise or fall in the long run, many in Britain will be left wondering – if shale gas is so abundant, cheap and comparatively easy to obtain, why are we not fracking here?