These Arguments Against Drilling Are All Wrong

Francis Holburne
Francis Holburne is the pseudonym of a writer based in London and former trader.

With America’s war in Iran causing extreme fluctuations in global energy prices, the debate around energy extraction in Britain has of late gained a renewed sense of urgency. Why is Britain so vulnerable to these kinds of energy shocks and how can we make our economy more resilient? Daily Sceptic readers hardly need to be told that it is our reckless pursuit of Net Zero that’s principally to blame for this sorry state of affairs. And yet, as such debates rage in the mainstream media, we see Net Zero advocates blithely trot out the same set of unflushable arguments to defend their cause. Sadly, in the less-than-intellectually-rigorous environments of, say, LBC or BBC Question Time, these arguments may even appear convincing on the surface. In reality, each suffers serious flaws. Here are seven of the canards you hear most often – and why they’re wrong.

‘Prices are set on international markets so UK extraction doesn’t help consumers’

This is perhaps the most persistent myth in the debate, and the most frequently cited, particularly since the first energy price spikes following the war in Ukraine in 2022. While it is true that benchmark prices for oil and gas exist internationally – Brent and TTF come to mind – there are plenty of dislocations in regional markets for gas. To claim that the existence of global benchmark prices used by traders implies that there is a single international price for oil and gas that must be paid by all consumers is to ignore the realities of market structure.

In fact, the energy crisis brought on by the war in Ukraine is the most instructive counterexample. The removal of Russian gas from European markets led to extreme price dislocations across regions. Massive spreads between US and European gas prices arose, as European countries scrambled to bid for liquefied natural gas (LNG) cargoes. It is precisely the marginal, most volatile source of supply that sets prices during periods of market stress. Commodity trading firms were able to make vast profits exploiting these dislocations. It is in fact their entire business model. Mostly they avoid flat price risk, preferring to trade the price differences of commodities across regions.

Britain currently imports about half its gas consumption. Domestic production would directly reduce reliance on LNG spot markets. Likewise, it reduces our exposure to geopolitical shocks. In 2022, the Energy Price Guarantee (which compensated suppliers for selling energy below market prices) cost the taxpayer £44 billion in support for households, in addition to the exorbitant prices paid for LNG to meet demand. Finally, higher domestic production improves the country’s current account balance, which in turn supports sterling and reduces inflation. This is a real, albeit indirect, benefit to consumers.

Private companies extract the oil so profits don’t benefit the public’

One of the most dishonest arguments made by the enemies of fossil fuel extraction is that, because private companies are the ones involved in extracting them, the public do not benefit. The tax arithmetic is unambiguous. North Sea producers operate under one of the most rigorous fiscal regimes of any industry in the British economy. The combined headline rate paid by producers, consisting of taxes such as the Ring Fence Corporation Tax, the Supplementary Charge and the Energy Profits Levy introduced in 2022, reached 78 per cent on profits at their peak. No other sector faces a comparable effective rate.

The state’s involvement in extraction is not merely fiscal. The government retains full control of the regulatory infrastructure. Not a single barrel is extracted without a licence from the North Sea Transition Authority. Strict conditions are attached to licences. Taxation can be (and has been) adjusted in response to windfall profits. The claim that private ownership severs the public from benefits of extraction does not hold up against reality.

Beyond the direct financial benefits to the Treasury, Offshore Energies UK estimates that the oil and gas sector supports approximately 206,000 jobs across Britain when direct, indirect and induced employment are included. This amounts to one in every 160 jobs in Britain. When we focus on key regional energy hubs, such as Scotland, the figure jumps to one in 30. Many of these are high-wage, skilled roles, which further benefit the Treasury in their income tax contributions.

‘We shouldn’t be expanding fossil fuel production during a climate transition’

Even taking this argument at face value, the policy conclusion drawn from it is erroneous. Even if we killed the entire domestic oil and gas industry in Britain, we would not really move the needle on global greenhouse gas emissions.

Gas currently heats 75 per cent of British homes. The electricity grid still requires gas for dispatchable backup generation when wind and solar output fall. Gas is also a crucial component in many industrial processes. From ethanol production to fertiliser, gas is a feedstock for many of the fundamental building blocks of a modern economy. This demand will not vanish simply because a licensing round is cancelled.

What changes when British production is reduced is the source of supply. Imported LNG requires far more energy to liquify, transport and regasify than gas piped directly from the North Sea. Replacing domestic production barrel-for-barrel with imported LNG produces an increase in emissions attributable to British gas consumption. The choice is then not whether we are creating emissions, but whether we are producing or importing them.

‘New extraction won’t lower consumer bills’

While this claim has an element of truth to it, it is not the trump card its proponents make it out to be. A single North Sea field is not going to set the price of gas. But the inference drawn from this that domestic production therefore has no bearing on British energy costs is dubious.

Consumer energy bills are affected by price volatility at least as much as by price levels. The 2022 crisis was not simply a function of insufficient global supply, as there was gas available. Rather, the withdrawal of Russian pipeline gas meant that there were suddenly a flood of bidders attempting to buy LNG cargoes to shore up their gas supplies. The marginal molecule, which sets the price, was therefore extremely expensive. Greater domestic production reduces the proportion of demand met from the costliest, most volatile supply sources. This matters enormously when the government’s exposure to energy price support schemes runs to the tens of billions.

‘Renewables and nuclear will replace gas before new fields come online’

Here we see a conflation of ambition with delivery. Both the Climate Change Committee and the International Energy Agency project gas being a part of Britain’s energy mix well into the 2030s. New build nuclear, while highly desirable, currently suffers from long lead times and cost overruns, and would require large scale government intervention to solve. Existing wind and solar are intermittent and require dispatchable backup. That backup is overwhelmingly gas-fired.

And even under the most optimistic decarbonisation scenarios, gas demand for industrial processes does not disappear. The claim that renewables and nuclear will displace all gas use in the relevant horizon is not supported by any mainstream energy forecast.

The international dimension is also impossible to ignore. Were Britain somehow able to eliminate all domestic gas demand, other countries will continue to require oil and gas for their energy and industrial needs. The question is then whether or not Britain ought to profit from supplying those needs.

‘We’re running out of North Sea reserves anyway’

This is simply, demonstrably false – and its persistence in public debate is remarkable given the availability of authoritative data. Charts float around showing declining production but conflate this with declining reserves. A look into the situation shows the reality.

The North Sea Transition Authority’s most recent reserves report, published in late 2025, estimates proven and probable (2P) reserves on the UK Continental Shelf (UKCS) at 2.9 billion barrels of oil equivalent as at end-2024. Contingent resources – discovered but not yet commercially developed – add a further 6.2 billion barrels. Prospective resources (unmapped and unmapped leads) add 4.6 billion barrels on top. In total, the UKCS holds an estimated 13.7 billion barrels of recoverable resource across all classifications.

The decline in production over recent years reflects government policy, lack of investment, licensing constraints and taxation regimes. As the NSTA has noted, a significant portion of contingent resources sits in mature developed areas and could be extracted through fresh investment and field development approvals. The reserves exist. The policy environment which permits their development does not.

‘Why bother increasing gas storage?’

Britain, by European standards, has a paucity of gas storage. Storage capacity in the country is equivalent to about five per cent of annual gas demand, even with the partial reopening of the Rough storage facility. This compares to a European average of 29 per cent.

Storage performs two functions critical to energy security: it smooths seasonal demand fluctuations, reducing the cost of winter supply peaks, and provides a buffer against supply disruptions. Countries with two weeks’ worth of storage are qualitatively more vulnerable to sudden supply shocks than those with three months’ equivalent. This was thrown into sharp relief during the 2022 crisis, with Britain’s low storage meaning there was less of a buffer to absorb price shocks.

The objection to expanding gas storage is seldom made on principled grounds. It is typically simply a downstream consequence of hostility to gas infrastructure more broadly. Storage, however, would increase system resilience. This ought to be welcomed.

The bottom line

Energy policy debates benefit from clear thinking, which requires distinguishing between arguments that are partially correct, arguments that are misleading and arguments that are downright false. The claims above fall variously into each of those categories.

The picture that emerges from a systematic overview of these claims is of a country that imports roughly half its gas, holds almost no strategic storage, faces burdensome taxes on the profits of its domestic producers and refuses to promote policy to arrest the decline in production of its most competitively priced supply. Meanwhile, large oil and gas producers such as Norway, Saudi Arabia and the United States will continue extracting, exporting and profiting from global energy demand regardless of what Britain decides.

The reserves exist. The fiscal framework ensures the public benefits from the proceeds. Employment benefits are numerous and are concentrated in areas which have few obvious alternatives. The environmental case for domestic production is at worst neutral and at best advantageous when compared with LNG imports. The argument against domestic oil and gas production is not primarily technical or economic, but political. It deserves to be argued on those terms with honesty about the trade-offs involved.

This article was originally published by the Daily Sceptic.