Monday 1 February 2016

"We Need a Low-Carbon Aberdeen"

I well remember the oil-price slump of the late '80s.  Aberdeen - long a boom'n'bust kind of town - went seriously down the plughole.  A bunch of oil companies that had commissioned very shiny, nay gold-plated new offices (there and in the West End) when the oil price had been a whole lot higher, were bitterly regretting it.  Piper Alpha seemed like the final nail in the coffin.  A load of US expats and English engineers who'd convinced themselves Aberdeen was the place for them trudged home again.  The cold wind whistles cruelly around the empty docks, and drunken oil-industry types are periodically fished from its icy waters, usually too late.

It happened all over again in 1998-9.  Yes, that's boom'n'bust, even if memories are short and we are all doomed to suffer history repeating itself.

The Grauniad has a 'diagnosis' - and a 'solution':
"The danger is that the North Sea becomes the Dead Sea, with business not returning even though there is plenty of oil and gas still under the waves. Some of the government cash will be used to find ways to extract small reserves profitably, before platforms and pipelines are abandoned. The oil price collapse has thrown Aberdeen into turmoil, but its decline has long been in sight. Ministers should have made the North Sea’s twilight years productive but transitional. A lot will depend on tax rates, which are already being cut ... This inevitably sticks in the craw of environmentalists, who see ministers rushing to the aid of Big Oil while slashing support for wind and solar energy, as well as ending carbon capture and storage projects. Ultimately the future of Britain’s energy should be green, not black. We need to find a new Aberdeen where low-carbon technologies are celebrated – and financed properly."
Before adressing this predictable guff, let's call to mind a few other factors.

1.  What I have called the Phoenix Phenomenon, which was behind Aberdeen's revival post Piper Alpha - a new generation of technologies that utterly transformed the North Sea's apparently dire economics, and with it the industry's bleak prospects.  Read and remember.
2.  Decommissioning - an enormous, new-ish industry which can't evaporate with the oil price or relocate itself to Iran (unless the government changes the regulations and allows oil & gas companies to walk away without clearing up).  The UK is perfectly placed to maintain its world-leading position on this and, ironically, for every North Sea platform that is abandoned early, a North Sea decommissioning project is advanced!

3.  Sunk costs and other financial dynamics, well-known and less well-known.  This isn't an economics essay but suffice to say, the kind of naive 'understanding' brought to bear by the Grauniad and other ignorant leftist nincompoops is hopelessly underpowered for the job in hand (though they are idiots of the 'useful' kind when it comes to lobbying for bailouts etc).

4.  OK, yes alright, Offshore Windfarms.  Shouldn't be booming of course but they are, and they seem to be the government's favoured outlet for our Keynes-pounds.  With what must surely be the imminent cancellation of EDF's ridiculous Hinkley C, there may even be a few more £££ to spare from that abundant pot.

Oh, and "green, not black"?  For the hundredth time, say after me:  GDP trumps GHG.  And I think we'll find Nicola Sturgeon agrees with me on this one, as she joins HMG in short- term bail-out funding.

So: "finding a new Aberdeen"?  Why not "watch and see how a new Aberdeen grows on the site of the current one"?  Because neither Grauniad editorial writers nor picking-the-winners civil servants have a clue where to look.       



Steven_L said...

I do worry how much of these millions for a new 'energy research centre' or suchlike is really going to be used to bail out the people building masses of office space in and around Aberdeen. Lending institutions seem to be very good at lobbying for this sort of thing. I've been here 3 and a half years now and they haven't stopped building shiny offices in all that time.

It's the car dealers I feel for. How will the bloke up the road from me sell used cars for more than the car brokers will get you a new one for now? And what will happen to the shiny new Audi dealership?

And all the old biddies at my dance class who ploughed everything into BTL on the basis you can get £600 a month and rising for a one bed heap. What will happen to them?

I reckon they'll muddle through somehow.

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