Is it Time for the UK to Start Investing in Gas?

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The success of the Gas industry is down to numerous factors. Specifically to Britain is the link to the weather as when there is a cold snap then more heating is used meaning more gas is burnt and both sales and profits are higher. However, in a mild period such as the winter that Britain has just faced then the demand dips and the market is oversupplied. The situation can cause stress and businesses but companies with quality service like 1st Choice Gas Services are able to continue to thrive.  However the weather isn’t the only variable, the biggest factor is the international market. OPEC’s flooding of the market has provided a surplus of product that is now available for low prices meaning that the requirement for gas dwindles even further. The two factors are crippling the North Sea oil industry leaving it in dire need of investment.

Oil is known as black gold due to its powerfulness as a resource. Like Gold, oil has caused wars and changed the balance of world powers. There have been recent calls for the UK government to buy shares in the North Sea oil and gas assets in an attempt to ensure that Britain’s black gold production sites are solidified and brought up to standard as they are currently at risk of abandonment. The clamour for oil investment is due to the current low prices in the oil industry that is causing the closing down of many pipelines and hub facilities. It is important that the economic recovery of oil is maximised to ensure that remaining reserves aren’t cut off from the rest of the world market due to a lack of available development.

Oil is currently trading at about $40 a barrel and it is set to increase to upwards of $60 and is likely to be sustained at that price for some time as OPEC begin to back down. Recently it had fallen to less than $29 which was surprising as less than two years prior the stocks had soared to $115. The current prices are a risk to Scotland’s economy which in turn makes a surge for Scottish independence to be less likely at this time but it should not be ruled out if the oil market has a quick upturn. The industry is calling for more support.  MP’s are calling for the government to support the industry during these tough times as they believe the government not only has a responsibility to support the economy but they also believe that an investment could end up profitable in the long term.

The government did have a large stake in the 1970’s but it was sold off during the reign of Thatcher which means that the only benefit that the British government receives from North Sea oil is through the tax returns. Other countries such as Norway have seen benefits from investing in energy as the profits have helped build up a large sovereign wealth fund. If there is ever a time for the British Government to act it would be now.