Fresh start for the North Sea – but Reeves must do more to make Britain truly energy secure: ALEX BRUMMER
Sometimes it takes war to make governments reconsider. That drilling in the North Sea is banned has been Labor Party doctrine since it came to power.
Energy Secretary Ed Miliband has long been seen as second to none when it comes to renewables and climate change.
He is probably right to think that green self-sufficiency is a worthy goal in the very long term.
Meanwhile, the Rosebank and Jackdaw fields in the North Sea are inactive but ready for use. There are drilling opportunities in the Irish Sea and beyond.
More UK oil and gas will not make Britain self-sufficient. Nor will it reduce fuel and gas prices on its own. As self-sufficient Americans have discovered, energy costs are determined globally.
The North Sea’s contribution will not be enough to radically change pricing.
Should we go back to work? Keir Starmer is reportedly preparing to allow development of the Rosebank and Jackdaw fields in the North Sea
Yet indications are that Keir Starmer, almost certainly backed by the Chancellor, is preparing to allow the development of Rosebank and Jackdaw.
Restarting drilling will make no difference to the Strait of Hormuz unless it continues for years.
This will mean that the UK is less vulnerable to the energy security, supply and inflationary effects of geopolitical flare-ups.
The other thing the government could do is listen to Centrica chief executive Chris O’Shea, who has been a strong advocate for expanding limited storage facilities at Rough off the Yorkshire coast.
In a competitive energy market, Centrica is not ready to go it alone and has long sought government support. The Conservative Party was as blind as Labor to the need for gas storage.
But how much better it would be if the Chancellor were willing to divert funding to gas storage from the infrastructure agenda currently dominated by HS2 rail. Even in an era of renewable energy that will keep Britain better protected from global fire.
Worlds different from each other
The United States and the International Monetary Fund (IMF) live in different universes. There are only a few blocks between the US Treasury building and the IMF Headquarters in Washington.
And America remains the largest investor in the Bretton Woods institutions.
All the discussion at the IMF this week was about the terrible damage inflicted on the world economy by the war against Iran and the blockade of the Gulf, the cracks in private credit and other cockroaches in the financial system.
But amid the gloom, Wall Street is rebounding strongly, with the S&P 500 and the tech-heavy Nasdaq buoyed by first-quarter results from banks.
Fund economists constantly remind us that Donald Trump’s ‘big, beautiful bill’ expanding tax cuts will result in the US debt-to-GDP ratio rising to 140 percent by the end of the decade.
Stock markets don’t seem to care. IMF managing director Kristalina Georgieva points out that the USA lives in its own universe.
The dollar’s exorbitant privilege means it can borrow from international markets with impunity.
The reserves of some countries are diversified, gold and other currencies are purchased, but the dollar remains in the first place among equals.
Georgieva also notes that the exceptionalism of the American economy has never been more evident. Approximately 70 percent or more of the world’s asset values are concentrated in the United States.
Adoption of the technology means productivity is increasing by more than 2 percent per year, and with AI gaining momentum (data centers are sprouting up everywhere) this could accelerate even further.
US Treasury Secretary Scott Bessent acknowledged that growth could stall this quarter due to the war. It claims that production will increase between 3 percent and 3.5 percent this year.
When markets refuse to die, analysts find reasons to justify enthusiasm.
But the IMF’s worse-case scenario forecast of a global recession could pull America into its orbit.
running buddies
First visitors to the Mall, the official green space in central Washington, will be greeted by an unusual sight: a group of finance ministers, including Rachel Reeves, out for a dawn stroll.
Among the gang were representatives of the Commonwealth, including Australia and New Zealand. Fortunately for the other participants, there was no Kenya.
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