Oil price crisis: Nationalisation needed to save jobs and protect the environment

The global oil crisis, deepened as it has within the past few weeks, has alarmed the capitalist class. The ‘shale revolution’ in the USA – a massive increase in production of shale gas through hydraulic fracturing, or ‘fracking’ – combined with weak global demand caused by insipid growth has triggered the fall of the price of oil; in six months the price of a barrel has halved to around $60. The determination by middle-east cartel OPEC not to cut production has increased downward pressure on prices.

The biggest losers from the crisis are Russia, who have been caught amongst a ‘perfect storm’ of falling oil prices (Russia’s main export is oil), a sliding Ruble and sanctions imposed by the west after the conflict with Ukriane. Russian President Vladimir Putin has predicted economic difficulties in Russia lasting two years.

In the UK the capitalist class and its pro-big-business associates are predicting huge ramifications while prices remain below $80 (the price required to turn a profit it is claimed). Rob Allan of independent explorer’s association Brindex warned the sector was ‘close to collapse’ and ‘almost impossible to make money [for investors]’. Research carried out by Goldman Sachs predicts that capital expenditure will need to be cut by 30% to restore profitability at current prices.

Sir Ian Wood, attempted to calm nerves over such ‘overly-dramatic’ pronunciations by suggesting that, as he expects, oil prices should sit around $60-65 over the next eighteen months, then 5-10% of jobs in the UK oil and gas industry will go, meaning between 17,000 and 35,000 jobs will disappear!

The impact is already being felt in real terms. On Wednesday, Sir Ian Wood’s Aberdeen-based Wood Group announced a pay freeze and a cut in contractors’ wages of up to 10%. Apache producers similarly followed suit.

Pro-big business politicians in the UK have been falling over themselves to appease the oil and gas companies. The Tory-led government recently announced a 2p cut in tax on profits and a new allowance on investments to encourage exploration. Danny Alexander, the Chief Secretary to the Treasury and Lib Dem, suggested a further cut in the ‘supplementary charge’ (from 32% to 30%) on oil and gas production in the UK and UK continental shelf could be included in March’s budget, stating, “taxes are going to keep coming down in the North Sea”.

The SNP followed a similar line; new leader Nicola Sturgeon stated her support for “bolder action on reducing the supplementary charge” and support for exploration. This follows on from hints made by Fergus Ewing (SNP Energy Minister) before the independence referendum that oil and gas companies could benefit from tax breaks in an independent Scotland.

Labour, led by new deputy leader Kezia Dugdale, were keen to exploit the crisis, attacking the prediction made by the Scottish Government Oil Statistical Bulletin of $113 per barrel. However, the only concrete solutions put forward were to work within the framework of the ‘responsibilities’ the Scottish Government has in relation to the oil and gas sector e.g. support for finding markets.

There is overwhelming support in Scotland for the transfer of full powers, which would include control over North Sea oil and gas revenues, corporation tax and powers over public ownership. Socialist Party Scotland supports these demands and called on the Smith Commission to deliver them.

We campaign for the only real solution to the crisis: an end to the rule of capital and the profit-driven markets. We are calling for the immediate democratic nationalisation of the oil and gas industry and that the main trade unions who organise in the north sea, RMT, Unite and the GMB, should call for this as well.

A publicly owned oil and gas sector alongside the nationalisation of the the major sectors of the economy, not just in Scotland but internationally would allow a democratic plan of production to be drawn up with the full participation of workers, trade unionists and communities. It would ensure the maintainence of jobs, pay and skills in the oil industry. Furthermore, a different vision for the environment is necessary; that where the direction of travel is towards renewable energy on a mass scale, safeguarding the environment and halting damaging expansionary fracking plans.